Jay-Z, Sequoia Invest in Rent-to-Own Startup

Rapper Jay-Z and actor Will Smith are among investors in a $220-million fundraising round for a startup that helps renters build credit to fast-track homeownership in the US.

Jay-Z’s Roc Nation and Will Smith’s Dreamers VC will invest alongside Silicon Valley heavyweight Sequoia Capital in Landis Technologies—a fintech start-up that caters to would-be homeowners.

Sequoia has invested early in several of the world’s most famous tech companies including Apple, Google, YouTube, Oracle, Instagram, WhatsApp and Airbnb.

Landis founders Cyril Berdugo and Tom Petit said the idea for the company came after witnessing renters losing money by paying more per month to live in a home where, based on its value, a mortgage would be cheaper.

“What makes Landis unique is our ability to coach anyone to homeownership,” Berdugo said.

“This new funding will allow us to help more Americans on their path to homeownership by expanding to new states, hiring talent nationwide and providing a better experience to our clients and partner agents and lenders.”

Landis’ clients, mostly renters, are typically first-time homebuyers with a budget between $150,000 and $550,000. The company purchases a house and rents it to the client until they can qualify for a mortgage.

Its clients can buy the property back at a predetermined price up to two years after the initial acquisition.

Roc Nation, a full-service music and sports management, music publishing and entertainment company founded by Jay-Z, will invest through its investment arm Arrive.

Arrive co-founder and president Neil Sirni said its decision to place a substantial equity commitment into Landis had come down to the company’s model which had been “built on trust”.

“Arrive’s long-term focus is on driving real and unique value for our portfolio companies,” Sirni said.

“If we remain hyper-focused on this mission, we believe we have the opportunity to build an enduring brand as a top-tier strategic investor.”

The latest raise for Landis, a combination of debt and Series A equity funding, takes the company’s total debt and equity to $220 million since launching in 2018.

While Landis did not disclose the round’s debt versus equity breakdown, or go into specifics about growth metrics, they expanding into new states was the driver for the funding round as well as to add to Landis’ headcount and improve user experience.

Landis currently operates in 11 US states. It aims to convert about 80 per cent of its renters into buyers—a much higher rate than other rent-to-own companies in the US.

Its latest $220-million raise will enable the company to buy roughly 1000 homes in its renters’ budget range.

Sirni said Arrive would continue to target capital towards Series A to Series C raises, as well as SPV growth and pre-IPO investments as part of a dedicated growth vehicle.

Arrive is also targeting further investment outside of the US with its focus primarily on south-east Asia, particularly in Singapore, Indonesia and Vietnam.