Posted on August 31, 2023
Read the original on my blog: The Higher Purpose Venture Capital Blog

Easing the burden of apartment rental payments

Company: Circa provides a new payment system based on flexibility and mutual respect. This new system aligns residents’ need for flexible, dignified, and accessible payments with properties’ need to collect on time.

HQ Location and Year Founded: Brunswick, ME, 2019

Founder: Leslie Hyman, co-founder and CEO, previously spent 20 years in the insurance industry with leading players including AIG, MetLife, and Swiss Re. Earlier in her career, she was a marketing executive with Leslie is a graduate of Williams College and holds an MBA from Columbia Business School.

Funds Raised and VC Investors: $2.3 million from CEI Ventures, Far Out Ventures, Hub Angels Investment Group, Launchpad Venture Group, Maine Venture Fund and Techstars

Where did the idea for Circa originate?

Circa came to be as a collaboration between my co-founder and myself. We bonded while working at selling life insurance to lower-income Americans. In understanding the “insufficient funds report,” we saw that 20% of the time, bills were not paid on schedule. We would have to reattempt payment in a blunt way, but we still only achieved 90% success in receiving payment. I was also helping manage the call center business in the Swiss Re business we were running. What you would hear from customers is, “I know when the money will be there. Please don’t attempt to take payment now.” They wanted us to re-attempt on a specific date of the month. Unlike Plaid, individuals know when the money will be there. We thought that there’s got to be a better way because “insufficient funds” doesn’t mean there’s no money.I personally have stayed in a few rental apartments in Chicago and recognize that tenants get paid on a certain date of the month. This insight really changed the landlord-tenant relationship. Tenants look at their apartment as a home that they can help maintain, as opposed to feeling like they have an adversarial relationship with their landlord. We recognized this pattern, adjusted billing practices, and changed the community.

What is the key problem that Circa intends to solve?

When you look at property management systems, nearly every one is built for the property. Not one, other than a few emerging proptechs, started from the perspective of the resident. We decided to be mobile and resident-first.The numbers are astounding. There are 44 million apartment units in the country, and about 110 million people rent. There are 11 million apartment owners who are chasing approximately $20 billion in late rent every month. We do the chasing in a humane way. We send notifications in advance, we follow up, and we have a sophisticated method to re-attempt. Some property owners face as many as 30% of their renters being late. With our technology, we solve the problem of management chasing down rent.

How are you most differentiated as a service?

There are companies that make flexible payments and collect rent using an app. However, there are no other companies that have built a residential, multifamily payment system that is a platform for financial inclusion and makes it work. We have a combination of flexible payment schedules that work for properties and residents, as well as providing full customer service and doing credit reporting. This combination is choreographed to solve acute pain for properties and residents, creating a better community.

What are the company’s key accomplishments to date?

On the personal side, people share stories of unexpected bills. Many wish to tell us their story, such as a teacher who is pregnant and can’t afford a medical bill. We understand these situations and are able to accommodate people in ways that others never have. Telling their stories can be quantified. We have a huge amount of data linking personal stories of why they needed to change their payment. We hope to use this data for good, not just to increase the likelihood of paying rent but also to reflect on credit bureaus.We have helped improve payments within a month by over 17%. Some of this is because of e-payment and automated payments, and for others, it’s because of flexibility and notifications. We also do arrears management.We have served 3000 units and are growing very fast with multi-communities.

What lies ahead in the plans for Circa?

We are tech-driven. Geography doesn’t matter,, and we plan to scale across the country. We have made an effort to focus on affordable housing spacess where the pain is more acute. We are mission-driven. We care about profit, but we we wake up feeling that there’s a better way. Improves our community. Everyone on our team is here because of what we do and how we can make a difference. We all believe in what we do.

Ron’s Take

There are times when seemingly simple insights can lead to creative, “win-win” solutions. Flexibility in paying what is for many their largest monthly bill, rent, goes a long way to building a better landlord-tenant relationship, as well as improving the chance that a bill will be paid on time. Much like the company Obligo, featured previously in this blog, Circa is driving a new standard of making apartment dwellings more affordable and accessible for the millions of people who rent their homes while living paycheck to paycheck.

Disclaimer: I am a personal investor in Circa via Hub Angels Investment Group.

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