Early last year Toby Thomas-Smith told the Herald that in 2023 his firm would raise $3 million to take on the New York subletting market.
Founders’ ambitions always have to be taken with a grain of salt - and it was not 110 per cent clear that things were on track when Thomas-Smith sent the Herald a photo of himself and co-founder Jack Montgomerie perched monkey-like on top of a desk after booking their Auckland to New York flight. Or when another pic arrived - this time showing the pair on a New York subway, with Thomas-Smith stripped down to his underwear (the pair were promoting a rebrand from “EasyRent” to “Kiki”).
Yet despite - or, indeed perhaps because of - such japes, the high-energy founder tripled that target. Kiki has just closed a US$6m ($9.96m) seed round, led by Sydney-based Australasian venture capital firm Blackbird Ventures, which chipped in US$4.5m.
The post-money valuation: US$28m - or double the young firm’s goal. “It’s an AI valuation,” Thomas-Smith quipped.
It’s billed as the largest seed round in NZ startup history (an investment stage that typically draws $2m or less in funding), and it was achieved when recession and high interest rates have made so many VCs pull their heads in.
A who’s-who of entrepreneurs also put money into the startup, including Bowen Pan, the San Francisco-based Kiwi expat who served as Meta’s founding product lead for Facebook Marketplace, ex-Bumble executive Michelle Battersby, Sharesies co-founder Hardy Michel, Halter co-founder Craig Piggott, ex-Uber executive Jaikumar Ganesh, ex Canva and Airtasker exec Mahesh Muralidhar, Ukrainian VC relocated to NZ Mark Pavlyukovskyy, Guy Horrocks (a director of Herald publisher NZME), who among many other ventures runs the “Flat White Meetup” networking events in New York and NZ, and Vend founder Vaughan Fergusson.
Auckland University BCom grad Thomas-Smith and Waikato grad Montgomerie (Bachelor of Business) launched in Auckland with an app for renting out student flats left empty over summer.
That venture fell flat, but the pair regeared - with the help of $230,000 in pre-seed funding from Fergusson and other backers - and turned their app into a platform for matching listers with people looking to rent for one to six months - especially Gen Zers.
Early last year, they relocated to Bondi for a stab at the Sydney market - and over the next 12 months about 5000 punters rented or rented out a home via EasyRent for an average duration of 32 days as $3.6m went through their platform (with the startup taking a 10 per cent cut or $360,000).
The app followed an invite-only “friend of friends” model to ensure people are vouched for and would, hopefully, respect someone else’s space.
They then “paused” their Australian operation - which Thomas-Smith said was profitable for its final four months - to concentrate on their long-planned New York push. But not before staging a 420-person boat party, in keeping with the startup’s general vibe.
Kiki has a brash goal, which would be completely ridiculous if it hadn’t just raised $10m.
By 2025, “Airbnb will try to buy us. And I’ll say ‘no, - we’ll buy you’,” Thomas-Smith said.
Airbnb (market cap: US$85 billion, properties: 7 million) is already the go-to for short-stay letting.
But Thomas-Smith said many Airbnb properties are investment homes. “It’s different when it’s your bathroom and your bed,” he said.
Kiki aims to make people more comfortable with a stranger staying in their home. And it does so by taking its cues from dating apps like Hinge - matching listers with renters with similar likes and preferences. (Hinge is Thomas-Smith’s preferred dating app touchpoint, as it’s more based around personality questions and finding longer-term relationships than the swipe left-or-right hookup world of Tinder.)
“We’re not a property company. We’re more like a social network. We’re in the human psychology business,” Thomas-Smith said.
He said the model was proven by the fact that two-thirds of the app’s Sydney listers were renting out their personal home for the first time - and that only “one in 500″ also listed on Airbnb.
Kiki is building hype by launching in only one New York suburb in October - which will be either East Village or Williamsburg (both trendy neighbourhoods with a “boho” edge). Other areas will follow. Users interested in signing up for the waitlist must submit their selfies along with their Instagram accounts. Kiki is accepting the top 10 people every week based on how many friends they invite and how many people share their Instagram story with @kikiclub.nyc tagged.
Users must link their Instagram accounts to be accepted and there is a “no weirdos” policy. In practice that means people must have at least a few Instagram followers and selfies to join - giving other members a feel for their personality. Instagram is also where renters and listers direct message, as Kiki doesn’t have its own DM feature.
If the New York launch goes well - Kiki is aiming for US$16m net revenue in the Big Apple over its first 12 months as 48,000 personal homes are filled - then the next step in its plan for world domination is to raise US$50m to scale up to 100 staff next year and launch simultaneously in 10 more large US cities, plus possibly London for good measure.
For that round, Thomas-Smith said the startup will definitely get an American VC firm onboard. The founder said when Kiki opened its US$3m seed round, it got term sheets from two of the top five VCs in the US as the over-subscribed action ended up bringing in double their target.
Why plump for Sydney-based Blackbird?
“We really wanted a US lead but Sam Wong really went to war for us. She said, ‘I think you’re going to be bigger than Canva. We’re not going to lose you’,” Thomas-Smith said, in a reference to Blackbird’s Auckland-based general partner Samatha Wong, who heads the firm’s New Zealand operation.
“EasyRent” has one of the most boring brand genesis records ever. Thomas-Smith said a web developer working on the service’s first website told him it needed a name. He didn’t have one. “Well it’s “easy” and it’s about “rent” the web contractor said.
Where did “Kiki” come from?
“Our users actually came up with it,” Thomas-Smith said. A crowd brainstorm suggested more than 800 names. Kiki was the most popular.
“It means a social gathering - a term coined in New York in the 1920s,” Thomas-Smith said. “There’s also a Japanese well-known movie called Kiki, which is all about someone who moved to a new city and felt super lonely [and] out of place and had to build their own community - exactly what we help people with.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
The industry faces challenges but hopes to bring newcomers and veterans together.