Obligo has landed $5m to replace the security deposit when renting property with open banking technology.
The seed round was led by 83 North (formerly Greylock IL) and included investments from Entrée Capital and HFZ Capital, in addition to a $2m credit facility from Viola Credit.
New York-based Obligo has developed a new financial standard to replace the security deposit in collaboration with Silicon Valley Bank’s New York City FinTech team.
Under this new standard, tenants would provide landlords with a limited billing authorisation instead of a cash deposit, allowing landlords to bill them for any damages incurred at the end of tenancy.
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. According to the company, this credit-based model protects the landlord from the risk of tenant default, while simultaneously ensuring that tenants won’t be faced with paying large claims upfront.
This billing authorisation relies on state-of-the-art Open Banking technology, and is backed by a novel credit-based capital structure.
“Many around the world have recognised 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.”
Obligo has also landed two new landlord partnerships to help launch 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. Following its initial launch in the New York residential market, the company has plans to scale nationwide.
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