Property-services startup Lessen agreed to acquire competitor SMS Assist for $950 million in the first major proptech deal of the year.
Lessen raised $500 million in debt and equity to finance the deal, which included Monroe Capital and Invitation Homes as investors, Bloomberg reported. The Scottsdale-based company was valued at $1 billion in 2021, but the latest funds value the startup at more than $2 billion.
Lessen is a real estate management platform that connects property owners and managers to electricians, cleaners and other service providers, specializing in large-scale renovations and updates between tenants. It raised $170 million in its Series B round in 2021, reaching unicorn status; Fifth Wall is a leading investor, while Khosla Ventures, General Catalyst and Navitas Capital invested in multiple rounds.
The deal will speed up Lessen’s push into a larger clientele base in residential real estate. With the acquisition, the company said it will be able to serve 250,000 properties — residential and commercial — each year and facilitate 2.5 million maintenance requests. In addition to its existing abilities, Lessen’s acquisition will enable the company to make minor repairs, an expertise of SMS.
Renovation work is overseen by Lessen’s in-house project managers, according to the acquisition announcement. The company is in more than 40 markets.
McKee, who is staying on as chief executive officer, previously founded single-family rental company Colony Homes America, which merged with an affiliate of Starwood Capital Group in 2015.
Recent developments in the proptech sector have been a mixed bag. Scott Rechler’s RXR last month abandoned plans for a SPAC to merge with a proptech company and agreed to return $345 million to investors. The shift came as proptech stocks for former power players like Opendoor went down the gutter.
But there’s still an appetite in the proptech sector for funding. Fifth Wall recently raised a record $866 million for a proptech fund, the largest-ever dedicated venture fund of its kind. Investors included CBRE and Equity Residential.
— Holden Walter-Warner