A startup backed by Citi and Peter Thiel lends people money to pay rent on the 1st of the month [Business Insider]

A startup backed by Citi and Peter Thiel lends people money to pay rent on the 1st of the month [Business Insider]

Originally posted on Business Insider

By Alex Nicoll

  • Jetty’s newest product allows people to pay their rent up until the 24th of the month.
  • The service costs at least $15 a month and doesn’t charge late fees or interest.
  • Jetty also raised a $23 million round from Citi and Flourish Ventures to help launch the product.

Freelance work is on the rise, with the Uberization of everything from taxi cabs to white-collar jobs. That means more and more of America’s workers can’t always guarantee they will get their paychecks by the first of the month — when rent is due.

A slew of financial products have popped up to give workers early access to their paychecks. Mark Cuban-backed Dave and Andreessen Horowitz-backed Earnin have updated the traditional “payday loan” model of providing short-term funds for cash-strapped workers. Those firms charge optional “tips” instead of the high interest rates that led some to call payday lenders predatory.

Joining the crowd is Jetty, a renter-focused financial technology company, with a new product that gives people most of the month to pay their rent. Jetty will pay rent to a landlord in full by the 1st of the month, then allow the renter 24 days to pay the company back — all for a monthly subscription fee that starts at $15. Landlords need to partner with Jetty in order for their tenants to use the service, called Jetty Rent.

The company has also raised a $23 million equity financing round from investors, including the investment bank Citi and Flourish Ventures, to back the development and rollout of Jetty Rent. It has now raised at least $63.5 million in funding from investors like Khosla Ventures, Peter Thiel’s Valar Ventures, and Ribbit Capital, which doesn’t include the cash from a minority stake that Farmers Insurance took in the company earlier this year.

Jetty Rent is essentially a loan, provided with the help of Cross River Bank, but the company doesn’t charge interest or late fees. Instead, late-paying renters are unsubscribed from the service until they’re able to pay Jetty back. The $15/month fee increases based on the renter’s credit or monthly rent cost.

The product’s usefulness for landlords and renters came into focus last summer as thousands of landlords negotiated payment plans with renters during the nation’s unprecedented unemployment surge, Mike Rudoy, CEO and cofounder of Jetty, told Insider.

Landlords told Jetty that they were creating their own payment plans for tenants who needed more time to pay, using Excel and email to track the installments. “They told us, ‘We are already trying to do this, but in a really backwards, old-school way. If you had a financial product that could do this much cleaner, we would love it,'” Rudoy told Insider.

Other firms offer similar services: Till, which raised $8 million in seed funding last year, analyzes a renter’s cash flow and adjusts their payment cycle and cadence to fit when they get paid, while Flex has a similar business model to Jetty but doesn’t require landlords to sign on.

Jetty Rent is debuting first to the tenants of mega-landlord Cortland, the 19th-largest multifamily owner in the US, and will eventually be rolled out across all 2 million units in Jetty’s landlord partner network. The company already works with landlords to distribute its other products, such as its security deposit coverage and renters’ insurance.

Jetty wants to offer large landlords many services with little hassle. The consolidation can help landlords cut down on account managers and sit through fewer pitches that result from working with many different providers.

“I think with all of the money flowing into proptech, we have heard that the largest companies, the Greystars and the Cushmans, are inundated with pitches every single day with some new services,” Rudoy said. “In order to complete over the long term, we can’t be a point solution. We have to be a platform.”