Tiger Global leads $70m round for China's Danke Apartment
Tiger Global Management has led a $70 million Series B-plus funding round for Chinese start-up Danke Apartment, operator of an online platform that connects landlords with long-term rental tenants.
Existing backers Gaorong Capital, Bertelsmann Asia Investments (BAI), Joy Capital, Vision Plus Capital, CMC Capital Partners, and Regent Capital all re-upped. These six investors participated in Danke’s $100 million Series B round in February, which was led by Gaorong and CMC. Gaorong was until recently known as Banyan Capital.
Founded in 2015, Danke provides high-end rental services in eight cities, including Beijing, Shanghai, Guangzhou, and Shenzhen. It manages more than 120,000 apartments and wants to reach 300,000 by the end of the year. The company seeks to offer a more transparent and efficient service by replacing agents as the buffer in between landlords and tenants. If the traditional rental market is C2C, Danke follows a C2B2C model, according to Derek Shen, the company’s executive chairman.
“Using our online database and artificial intelligence technology, we generate leasing information in specific areas and secure large-scale apartments from landlords by offering reasonable rental prices. Given the large volume of properties, we can renovate at high quality but lower cost,” he told AVCJ in March. “After leasing out, we provide one-stop, free services in areas such as cleaning, maintenance, and wireless internet.”
Shen founded group-buying service platform Nuomi in 2010 and sold the business to Baidu three years later. He moved to LinkedIn as head of its China division, while Danke was one of several companies started by other ex-Nuomi employees. Shen made an angel investment in the business in 2015 ahead of its official launch and then joined full-time last year.
China’s long-term property rental market received a boost last year when the government shifted policy to encourage rental rather than home purchasing, with a view to curbing prices. Real estate broker Lianjia projects the market will rise from the current level of RMB1.1 trillion ($172 billion) to RMB2.9 trillion in 2025 and RMB4.6 trillion in 2030. By 2030, the leasing population will be 270 million, with young people responsible for most of the additional demand.
There are two basic business models: decentralized providers that sign up landlords individually, which is costly but allows for rapid scaling; and centralized players where the operator owns the whole building. PE investors have gravitated to the former category – which includes Danke – although individual strategies vary. Some companies formally lease apartments from individual owners and then releasing them to tenants after making renovations, while others function more like marketplaces.
Last month, Uoko.com received RMB1 billion in equity and debt funding, while Baletu.com secured a RMB300 million round. These commitments followed a RMB4 billion round for Ziroom, a spin-out from Lianjia, and a $100 million Series C for Qingke.
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