When Dylan Lenz was burned by a lousy tenant, he applied his tech savvy to a real-world problem and started a housing-focused business that’s growing faster than the local rental market has dried up.
“Basically I put my life savings into a rental property in Kelowna and the tenants were bad,” said Lenz.
These “professional tenants” knew how to work the system, he said, ultimately leaving him out four months of time and $22,000 in unpaid rent, repairs and eviction fees.
The setback sent the UBC Okanagan grad into action, proving yet again that necessity is the mother of invention.
“It was a pretty rude wakeup, so 30 days after that tenant was evicted I started the company.”
Naborly is its name, and his partners are fellow UBC Okanagan alum Zeke Kan and Anastasia Fox.
Naborly gives landlords greater insight into whether a potential renter is a risk by analyzing 500 data points.
Looking into things like social media presence, credit scores and rental histories, they’re able to assess the likelihood of a tenant being evicted, paying their rent late, vacating early and damaging the property.
According to Lenz, the program has a 99 per cent success rate. What’s perhaps more relevant is that the public appetite for a product of Naborly’s kind is strong.
The company is seeing revenue of $2,000 per day and they’re hitting about 20 to 50 new landlords daily.
“We’re solving a really unsexy problem,” said Lenz, noting that many small-scale landlords don’t have the power needed to screen clients effectively. “Everyone wants to solve a social media problem or build a travel app. But I was a young landlord and had a background in technology so…we are willing to build a product that isn’t the most interesting, but is useful.”
While they’ve had some initial successes, Lenz points out they need more capital to expand so they’re entering the process of raising another round of funding.
To date, they’ve raised $500,000 and are looking to raise $2 million in seed capital. “We have our lead investor locked in, but we are trying to put the rest of the money together,” he said, noting that they’re focused on securing Canadian investors.
“The goal of this company is not to be acquired by a bigger U.S. firm. We want to build a legitimate Canadian start up company.”
Early on in the development of Naborly, Lenz and his partners realized they had to leave Kelowna if they were going to be successful.
“Kelowna is limited if you are a start-up trying to make it,” he said.
Roughly 90 per cent of Naborly’s largest customers are in Toronto and perhaps more importantly, being in a larger city has allowed the company better access to venture capital, an affordable employee base and high quality advisors —all of which exist in Kelowna, said Lenz, but not in the quantity that’s needed.
“When we were in Kelowna we applied to Accelerate Okanagan, and it was almost impossible to get a meeting,” he said.
“When we did, they said, ‘That’s cool, but it’s not a good fit for us.’”
When Naborly moved to Toronto, “everyone was super receptive.”
They’ve found a bounty of clients, and now have 8,500 landlords, representing 100,000 rental units. They also found a much deeper engineering talent pool.
“In Kelowna, Disney, Procera and other successful companies soak up the talent, which makes it hard if you’re just starting up,” Lenz said, explaining that a new company can only offer employees half of what the big companies can.
And then there was the funding. “$500,000 early on is the difference between a company failing and not failing,” he said. “If you look at any successful tech company, none of them have been chosen by the government and none of them have been given grants.”
Lenz believes funding should be based on market demand alone.
Investors, however, are a bit more cautious than they once were.
“The market for tech start ups has changed,” he said.
“For awhile money was running in the streets, but now you can’t get funding without a product or without a customer.”
And the sexy products that are social media-oriented aren’t necessarily a success anymore.
Practicality may be what’s important to look for going forward.
Uber, for example, met a need. Lenz also read a story recently that highlighted a tech company’s solution to shipping tanker conundrums, and has been a big success.
“Who knows, maybe tenant screening will be the next big success,” he said.
Although it still hasn’t earned the moniker “tech hub” Kelowna’s politicians continue to work toward making the city more friendly to the industry.
“We are trying to do whatever we can to promote tech in Kelowna,” Mayor Colin Basran said in an interview earlier this year, following an announcement from Accelerate Okanagan that the tech industry was adding $1 billion to the economy annually.
Among the city’s endeavours aimed at bringing tech companies to the shores of Okanagan Lake is the installation of about 13 kms of fibre optic cable to provide high bandwidth data services to a number of city facilities.
The fibre optic cable implementation has provided significant operational cost savings, faster data response time and innovative new ways of providing service.
The city also intentionally over-built the network to include extra optic fibre to accommodate future city needs and be available for lease to move significant amounts of data.
Another piece of the puzzle is the Innovation Centre, which should be completed in November on land the city provided.
Accelerate Okanagan, a business support system for tech companies in the startup or growing phases, will move into the building and find a network of services.
They’ve recently announced a measure aimed at dealing with the lamented funding gap.
Atrium Ventures VCC Inc. (Atrium) created a $5-million investment fund dedicated to nurturing early stage companies in B.C.’s technology sector.
Fund manager Jeff Keen, director of Wheelhouse Management Inc., described it as a “pre-seed/seed stage fund” that will target promising technology ventures looking to secure equity-based growth capital.
Anchored by commitments of
$1 million from the Southern Interior Development Initiative Trust, $750,000 from Interior Savings Credit Union and a growing list of forward-thinking angel investors, Atrium aims to fill a critical gap for early stage tech startups looking to raise equity capital.
“A long-time challenge facing all founders of early stage tech companies and, specifically, companies based in the Okanagan where there is no established venture capital presence, is access to a formalized funding source. Many times these founders are forced to seek capital outside the local community and we aim to change that,” said Keen.
Luanne Chore, CEO of SIDIT, sees the fund as a natural extension of their mandate to support strategic investments in economic development projects in the Southern Interior.
“SIDIT is thrilled to be part of Atrium because it allows us to support economic growth in the region, helping companies at a very early, often tenuous stage,” said Chore. “That’s something that has not always been viable through SIDIT’s traditional fund structure.”
Further lessening the burden on startups, as VCC established through B.C.’s Investment Capital Branch, Atrium investors will receive a 30 per cent refundable B.C. tax credit.