Another proptech startup has run into trouble.
Frontdesk, a startup that managed more than 1,000 furnished apartments across the United States, laid off its entire 200-person workforce Tuesday after attempts to raise more capital failed, TechCrunch exclusively learned from sources familiar with internal happenings at the company. The mass layoff comes just seven months after the Milwaukee, Wisconsin-based startup acquired smaller rival Zencity.
The layoffs, which included full-time, part-time workers and contractors, occurred Tuesday afternoon during “a two-minute Google Meet call,” according to one employee who was among those attending the virtual meeting.
During that call, Frontdesk CEO Jesse DePinto told employees that Frontdesk would be filing for a state receivership, an alternative to bankruptcy, according to the sources.
The company has not responded to a request for comment. When calling the number on Frontdesk’s website, a recording says: “Currently, Frontdesk is unavailable. If you have a reservation, please seek alternative accommodations and expect to be contacted within the next two weeks.” TechCrunch will update the article if the company responds.
Frontdesk, which was founded in 2017, had raised about $26 million from investors such as JetBlue Ventures, Veritas Investments and Sand Hill Angels, according to Crunchbase.
Frontdesk went out for a bridge round, attempting to sell investors on a new plan of doing full building management, sources told TechCrunch. That tactic didn’t work out and the company couldn’t keep operating. Frontdesk was apparently still optimistic about its ability to raise more capital; the startup had posted on LinkedIn openings for several jobs, including a chief of staff role, just two months ago.
As a result of all the challenges, the company was not only not able to make rent on a number of properties but had “little to no communication with” the reportedly infuriated landlords, according to the sources.
The startup’s business model, which is leasing apartments at market rental rates and furnishing them for short-term rentals in more than 30 markets, has struggled largely due to the upfront costs involved, associated capital expenditures and variables in demand and rates, one of the sources said. Others in the space have also had challenges, including Stay Alfred, Domio, Lyric, Zeus Living, The Guild and WanderJaunt. Ironically, Frontdesk previously acquired over 100 units across several cities from WanderJaunt, Stay Alfred, Lyric and Domio.
Comment