About Hemlane
SVB is thrilled to share this founder’s story about Hemlane, Inc., a technology company that enables rental landlords to manage their properties remotely using online tools that collect rents, coordinate maintenance properties and track expenses. The company is headquartered in San Francisco.
Hemlane offers rental property management with Sleek UX and Fintech
Dana Dunford had no plans to leave corporate life when she entered Harvard Business School in 2013. But as she neared graduation, job offers from two previous employers – Apple and Google/Nest – had new competitors.
It all started with Harvard professor Thales Teixeira lecturing on decoupling services to deliver savings to customers and steal market share from industry leaders (he has since written a bestselling book on the subject).
That’s how Dana spotted an opportunity when friends and family spoke up about managing their rental properties. The problem, they said, was that they had only two options: manage everything themselves or hire a management company that charged 10% of their rental income to do everything: ad openings, planning visits, tenant screening, background checks, rent collection. and oversee maintenance.
And while no one wanted to take a call about a back-up toilet on a Friday night, most wanted to take care of some of the chores themselves to save money and better understand their expenses. “When you buy a real estate investment, it’s not like stocks, where you just put money in it and watch it,” says Dana. “You buy a physical asset and you want it to be something you have more control over.”
Frank Liu, a mutual friend and start-up entrepreneur with a Stanford MS degree in management science and engineering, also participated in these conversations. As he started tinkering with software ideas, Dana dug in to research the industry, learning that 72% of rental properties1 are self-managed. She also found that rental property owners in America had fallen from 8.3 million to 10.7 million.2 during and after the mortgage crisis of 2007 and ’08.
“Rental property management was a huge market that hadn’t been tapped by technology,” says Dana.
The vision she and Frank shared: to use fintech to reduce costs and simplify property management in the same way that digital robo-advisor platforms had disrupted investing.
A startup is born
Dana recalls Thales’ patient mentorship at a weekend brunch he and his wife hosted at the Harvard Faculty Club. While she and her classmates brainstormed, he sat, allowing the conversation to reveal their passions and skills. “He listened to me ramble for 15 minutes before asking, ‘Have you ever thought about X, Y, Z?'”
Energized by the session, she poured her findings into a group project that earned top marks in a design innovation course. Shortly after, Thales asked her if she would stop by his office, where he presented her with a $30,000 convertible note that she and Frank could use if they pursued the startup together.
Lying awake in her Boston apartment, Dana ticked off the costs of her personal life: disposable income, nights out with her husband, ski weekends in Tahoe with girlfriends, cheering on the San Francisco Giants at home with her sisters.
Taking a job at Apple or Google would guarantee 9-to-5 workweeks and weekends.” But it was kind of like, ‘God, I’ve been there before. I’ve done that before. .””
Graduate school, Dana realized, had changed her. And now she had a promising concept, a mentor who believed in her, and a unique technology partner. She made the decision in her last semester. At 29, she entered a risky male-dominated financial space.
Dana had wisely built a strong network of friends, including Gavin Myers, co-founder of real estate disruptor Prudence Holdings (now Prudence Ventures). “He always said, ‘Don’t compare yourself to anybody else. Just keep your head down and keep going.
She also had thousands of LinkedIn connections, and she reached out to them all, asking if they’d put her in touch with friends who owned rentals. This positioned her to find weak spots and test the online tools that Frank was developing.
Tenants loved it because they could click a button, quickly integrate their bank account, set up autopay and receive lease renewal reminders and everything in the system to improve financial tracking and payment processing.
The solution: revolutionize the management of rental properties
In March 2018, Hemlane (inspired by hem, or “house” in Swedish and the imaginary path that separated their business from others) was up and running. A user-friendly system guided landlords through the steps of setting rent, recording expenses, and requesting maintenance and repairs. “We made it super easy, so they don’t have to think about it.”
Hemlane also provided the owners with income and profit and loss statements, a lease register and a cash flow statement. And while traditional models hold rental payments in trust accounts for up to 15 days before paying landlords, Hemlane’s tenant payments transfer directly to landlords, a major convenience for landlords and a differentiator for tenants. ‘business.
Dana and Frank also used financial technology, or fintech, systems to send reminders that would help tenants avoid late fees and make it easier to pay rent. “Tenants loved it because they could click a button, integrate their bank account quickly, set up autopay and receive lease renewal reminders and everything in the system to improve financial tracking and payment processing.”
Hemlane’s fintech systems have also made the startup attractive to investors, Dana says, because “sticky” products like payment processing systems help retain customers.
While Frank continued to perfect the system, Dana handled marketing, account management, technical support (“People don’t understand this button…”), and sales. Even after she started hiring staff, she coordinated repairs. “My husband didn’t like it because my phone was ringing at 2 a.m., and he was an owner testing that we had 24/7 repair coordination,” she laughs. “But it was the impetus to understand what people needed and what they were willing to pay for.”
It’s also how she and Frank have come to the conclusion that certain functions are always best handled by people, who can reassure tenants of broken toilets, beeping smoke detectors and other unpleasant surprises. Dana also makes sure it’s not just about talking. “If you submit a maintenance request, our team takes care of it.”
Series-to-Series A seed during a global pandemic
In December 2019, Hemlane announced that she had completed a $2.5 million series funding round led by Gavin’s company. When the COVID-19 pandemic hit a few months later, the company pivoted quickly, implementing new processes and educational programs to help landlords and tenants through uncertain times.
First, they emailed landlords, advising them to offer alternative payment plans or let tenants terminate their leases without termination fees if their income had been impacted by COVID-19. They also implemented a “suspend” button in their online payment system to make it easier when tenants needed to declare and document their inability to pay rent or switch to a revised payment plan due to COVID-19. .
They held Zoom webinars to educate customers on federal guidelines designating who could legally delay rent payments and who could not. And they followed up with live Q&A sessions and blog posts in which real estate attorneys answered client questions.
These measures, Dana says, have helped Hemlane property owners keep rent defaults below the national average. “Usually when things go wrong in our industry it’s because there’s so much tension between landlords and tenants. And usually it comes down to people not understanding each other. This is where the power of technology can be used to build a better bridge.
This has enabled Hemlane to forge ahead during a challenging period in the rental industry, positioning it for a successful Series A funding round in 2021 co-led by Asymmetric Capital Partners and Prudence Ventures.
SVB was super founder friendly in so many ways. Those first two years, we had almost no money in our bank account, and they gave us free checks and waived many fees. It’s really useful when you’re just starting out.
Dana Dunford, Co-Founder and CEO
Hemlane joins forces with SVB
At the beginning of the Hemlane adventure, a friend from the satellite start-up Skybox Imaging recommended SVB as a banking partner. “He said, ‘It’s not just a bank. They’ll help you with your funding, raises, and other things too,” Dana says.
She’s glad she took his advice. “SVB was super founder friendly in so many ways. Those first two years, we had almost no money in our bank account, and they gave us free checks and waived many fees. It’s really useful when you’re just starting out.
Dana also appreciated the agility of SVB bankers at every stage, from setting up accounts to closing loan agreements. “They responded immediately with everything I needed.”
In October 2021, SVB offered $3 million in venture debt to supplement investor commitments of $9.17 million under the company’s Series A funding round. Those are big numbers, but the company already posts $210 million in annualized payouts.
Dana and Frank’s strong network and focus on innovation continues to serve the company well. A new option they are considering is working with SVB’s Fintech Accelerator Group to develop their own payment infrastructure. “That would be an incredible saving,” Dana says.
Dana still loses sleep from time to time, but it’s not about whether she should have chosen the easier career path. “I haven’t looked back,” she says. “But sometimes I wonder if Frank and I would have had all those sleepless nights if we hadn’t wanted this to be Thales’ best investment.”
To see more real-world growth stories, read SVB’s new eBook, Strategies for Growth Beyond Series A. Learn about the latest market trends in our report, The State of Fintech.
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