Israeli real estate fintech co Obligo raises $5m

startup photo: Shutterstock

Obligo has developed a security deposit for tenants to provide landlords with a limited billing authorization instead of a cash deposit.

Israeli real estate fintech company Obligo Inc. has announced the completion of a $5 million seed financing round led by 83 North (formerly Greylock IL) and with the participation of Entrée Capital and HFZ Capital, in addition to a $2 million credit facility from Viola Credit.

Obligo has developed a new financial standard to replace the security deposit - the large sum of money required when renting an apartment. Under this new standard, tenants would provide landlords with a limited billing authorization instead of a cash deposit, allowing landlords to bill them for any damages incurred at the end of tenancy. This billing authorization relies heavily on state-of-the-art Open Banking technology, and is backed by a novel credit-based capital structure. Obligo’s solution has been developed in collaboration with Silicon Valley Bank’s New York City FinTech team.

Proceeds of the seed round will be used to drive new client acquisition, meet the growing demand for deposit-free leasing, and further advance the development of Obligo’s underwriting and payment technology.

The financing arrives with the start of two new landlord partnerships that will help launch the company into the mainstream rental landscape. Olshan Properties, a privately owned real estate firm, and Adam America, a leading real estate developer and investor, collectively own and manage more than 15,000 rental units throughout New York City. Obligo has plans to scale nationwide following its initial launch in the New York residential real estate market.

The company founded by Israeli brothers CEO Omri Dor and president Roey Dor. Omri Dor said, “With a traditional deposit, you’re paying a huge sum in advance for damage that likely won’t happen. It’s wasteful and completely unnecessary, considering what’s possible with modern financial technology. What Obligo offers is a common-sense approach. Tenants should only pay for damages if they actually cause damages.”

In the event of a claim at the end of a tenancy, Obligo pays landlords right away while enabling tenants to repay the claim in installments. This credit-based model allows Obligo to protect the landlord from the risk of tenant default, while simultaneously ensuring that tenants won’t be faced with paying large claims upfront. The subscription for a $2,500 billing authorization will start at $9.90 per month, ridding the tenant from the burden of paying the equivalent cash deposit.

“Many around the world have recognized the need for a new model to replace the traditional security deposit,” said David Buttress, partner at 83 North. “We reviewed quite a few solutions, and Obligo stood out as a clear front-runner with outstanding technology and an efficient credit-based capital structure that enables the company to reach a remarkably low price point. This is the only solution we’ve seen that can truly make the security deposit system obsolete.”

President Roey Dor said, “New York tenants and landlords understand better than anyone how burdensome the antiquated security deposit system can be. Obligo tenants are free to invest these unlocked funds or use them to repay student debt. At the same time, landlords receive a compelling value-add that they can deliver to tenants while reducing admin and retaining both security and accountability.”

Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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startup photo: Shutterstock
startup photo: Shutterstock
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