Ex-WeWork director raises tens of millions for Den’s tiny residence plans

If it wasn’t for WeWork’s failed IPO, Mike Romanowicz most likely wouldn’t be constructing a proptech enterprise proper now. The entrepreneur left his place as director of product administration and strategic partnerships on the well-known co-working firm in January.

On the time, Romanowicz detailed that development specs on small houses — that he had begun as a aspect hustle — have been touchdown a pair thousand {dollars} in income per 30 days. He doubled down on his concept by investing $10,000 of his personal cash — which he used to relaunch the enterprise beneath the title Den.

Den, which launched in July 2020, introduced at the moment that it has raised $3 million in enterprise capital in a spherical co-led by Gutter Capital and Crossbeam Enterprise Companions. It’s far much less capital than a few of Den’s largest rivals have raised, together with however not restricted to Atmos, which has raised practically $20 million in funding; Homebound, which has raised round $148 million; and Welcome, which has raised practically $35 million.

But, Den’s founder is assured that their method — and lean capital technique — will assist them win. Whereas many proptech companies require large capital consumption to assemble bodily houses, Den’s predominant product is a digital platform constructed round a extra refined design and development course of. What meaning is {that a} buyer can come to Den for assist with all of the levels of homebuilding, from discovering a design to selecting the correct land. Suppose much less development, and extra end-to-end challenge administration.

From his view, there are two predominant classes of how housing is delivered in america: customized housing, the place a person customizes each single dimension of their residence, or speculative housing, a turnkey home constructed by builders with the aim of somebody shopping for or renting the situation sooner or later. The latter — a completely executed residence — requires a distinct stage of capitalization, he says, and the previous is, nicely, extremely costly.

Den, in the meantime, needs to supply a house that’s well-designed with crystal-clear specs, after which handhold the householders by way of the method. Romanowicz stands by the truth that only a few folks, even at structure companies, don’t absolutely specify the size of a home and permit many selections to occur after the method has begun. “It creates a compounding impact that provides time and value and removes your capacity to precisely depict when a challenge goes to finish,” he stated. “Individuals are always selling prefabrication as an answer, however for us, we’re attempting to consider hermetic specs.”

Going again to that financing spherical, although, Romanowicz says that Den needs to remain asset gentle on objective. The corporate was making income by way of digital spec plans, which he describes as a high-margin asset gentle product, earlier than elevating any exterior capital. He’s hoping the bootstrapping mentality paired with a modest first spherical will give the corporate optionality in at the moment’s financial system.

“Let’s proceed to be asset gentle, as a result of it’s identical to a strategic benefit for us,” he stated. “So our focus has been course of, design, consumer expertise, the mental property of the design and the expertise — meaning we will transfer quicker, we don’t want to lift tens of millions of {dollars} to construct spec houses and promote them at market price like among the people within the class.”

Nonetheless, he didn’t deny that Den might sooner or later get extra into the procurement enterprise. Monetization choices down the street, he stated, could be something from monetizing on the sale of a property, to procurement to financing and monetary companies round several types of insurance coverage from householders to builders. “We’ve got a whole lot of issues, challenges to get by way of earlier than we will even scratch that itch.”

At the moment, the largest hurdle is the “operational problem of staying targeted.” Fortunately, he thinks the market is prepared for it.

“There’s huge growing teams, state by state, that basically simply want a greater advertising and marketing and buyer acquisition engine,” he stated. “And that’s what we’re right here to offer.”