PadSplit, a startup innovating in the affordable housing market, has closed a $4.6 million seed funding round led by Core Innovation Capital, a venture fund that focuses on companies with a social impact to “democratize prosperity.”
Additional investors include a mix of corporate, social impact, and real estate-focused investors: Cox Enterprises, Kapor Capital, Techstars Ventures, 1984 Ventures, The Impact Engine, Metaprop and Enterprise Community Partners. Core Innovation Capital’s Arjan Schütte and Kabbage co-founder Kathryn Petralia, who served as PadSplit’s mentor during the Techstars Atlanta program, will join PadSplit’s board.
“We were very focused on investors that we thought could add either significant value or credibility. We didn’t want to sacrifice quality of our mission here,” PadSplit’s founder Atticus LeBlanc tells Hypepotamus.
Two-year-old Padsplit was founded when LeBlanc, a long-time affordable housing developer, had the idea for a for-profit, tech-enabled model that turns single-family homes into affordable multi-unit houses.
The digital marketplace allows private landlords to market their homes to individuals searching for housing, pairing them by distance to work.
PadSplit requires its landlord to adhere to standards such as fire safety codes, renovations, and energy efficiency measures.
On the tenant side, a PadSplit “membership” includes rent, water, WiFi, laundry usage, and parking in one weekly payment. Members never have to sign a long-term lease, giving them more flexibility.
Members can also request maintenance and rate their roommates or landlord through PadSplit.
PadSplit says its members earn an average of $21,000 annually and report $460 in monthly savings by using the service. Landlords report a 60 percent increase in their earnings by using the platform, which splits the profit after deducting a marketplace fee.
“The value proposition is really simple,” LeBlanc tells Hypepotamus. “It’s basically do less work, make more money, and do more good.” They currently have over 200 units on the market across Atlanta, split up amongst over 30 houses.
Though the mission-driven startup has received non-dilutive funding from foundations and other sources, LeBlanc says they needed this equity round to “grow aggressively and expand to new markets.”
He intends to be in two new cities, in fact, before the end of the year.
In their first market of Atlanta, LeBlanc says that the overall support on the government side “has been very positive,” though, “you’re never going to get universal consensus on affordable housing.”
Beyond expansion, PadSplit is also working with a new Atlanta-based Opportunity Zone fund to create new PadSplits in designated opportunity zones across the city. The startup will soon move into a new office in an Opportunity Zone on the west side of Atlanta.