Venus Williams, Kevin Durant Believe In This Lease-To-Own Commercial Startup
A startup that uses a lease-to-own business model to give small-business owners greater opportunities to own their commercial property is gaining funding traction from big-name investors.
Withco, a startup launched in New York in 2019 by Kevin Song, has raised $32M in a seed and Series A funding round headed by companies Canaan, Founders Fund, Initialized and NFX. Famous angel investors include professional tennis player Venus Williams, pro basketball star Kevin Durant and former Department of Housing and Urban Development Secretary Julián Castro.
Withco’s business model is essentially a commercial version of the home investors that purchase residential properties on behalf of prospective homeowners, allowing them to put monthly rents toward a down payment.
Song was inspired to launch the company after his Korean immigrant parents had to hand over the keys to their grocery store business in Brooklyn after the landlord doubled rents, according to Yahoo Finance.
The company aims to address those small-business owners that qualify for a lease but not a mortgage. The firm’s platform acquires commercial real estate “in partnership with high-quality small business owners and works to transition them to full ownership over the course of a standard lease term,” according to a press release.
The firm will target occupied small-business properties under $5M across the United States with a focus on the Southeast, Midwest and Texas.
"We are grateful to have quietly built a pioneering business over the last two years with a world-class team and the resources and guidance from not only the most successful innovators in real estate, but also the greatest champions of small business in America," Song said in the release. "We've reviewed thousands of small business partnerships and property investment opportunities and are committed to supporting our next 100 small business partners in 2022."
Other notable investors involved in the funding round include Danny Meyer's Enlightened Hospitality Investments; Lennar’s venture arm LENX; Will Smith's Dreamers VC; and the founders and CEOs of Affirm, Carta, DoorDash, Invitation Homes and Opendoor.
"Withco is filling a missing piece of the market for sellers and their agents by acting as a capitalized, data-driven investor that can efficiently purchase inventory that no one can or is willing to understand,” Rich Boyle, partner at Canaan and former CEO and chairman of LoopNet, said in the press release.