An Austin startup that manages short-term vacation rentals for property owners has raised $10 million to break into new cities.
Founded in 2013, TurnKey Vacation Rentals provides an online service that handles the process of renting out a vacation home, from marketing it on sites like HomeAway and Airbnb to sending a clearning service when guests leave.
The lead investors in the deal were Altos Ventures, based in Silicon Valley, and Silverton Partners, based in Austin. The new money brings the total received by TurnKey to $20 million.
The deal comes as the Austin City Council is taking steps to limit certain types of short-term rentals listed by companies like Austin-based HomeAway. In a 9-2 vote last month, the Council voted to ban all "Type 2" short-term rentals – the type of rental in which the owner doesn't live on site – in all residential areas by April 1, 2022.
That followed another 9-2 vote in which council members decided that Lyft, Uber and other ride-hailing companies must require their drivers to complete fingerprint-based background checks, a requirement that the ride-hailing companies aggressively lobbied against.
The moves launched a debate by entrepreneurs and venture capitalists, some of whom say that by restricting "sharing economy" companies, the city is sending a negative message about its commitment to the tech startup community.
TurnKey co-founder T.J. Clark called the City's ban on some short-term rentals "an overreaction," but said his company isn't worried about the future of the short-term rental market, even in Austin.
"Regardless of what the City Council has just done, we just don't think these rentals are going away," Clark said. "2020 is a long time away and we believe that there will be legal ways forward for owners of short-term rentals. As these issues get resolved, I think you'll see more rentals in Austin and across the country."
Today, Turnkey manages about 1,000 properties in 24 markets, including Austin, San Diego, Seattle and Aspen.
In Austin, the company is currently signed to manage 200 short-term rentals during the South by Southwest festival.
TurnKey's service includes setting a rate, promoting the home on vacation rental sites and responding to guest inquiries and handling reservations.
When a property is booked, TurnKey oversees the visit, including check-ins, cleaning and maintenance.
Guests check in using a digital lock that doesn't need a key, and they download a mobile app to get information about the property and reach TurnKey staff.
To monitor noise, an Android tablet is installed in every home that monitors the decibel level. TurnKey also works with a private security firm to remove guests if they cause disturbances.
After a visit, TurnKey calculates taxes and handles legal filings.
"We're pro-regulation, pro-licensing and pro-paying taxes," Clark said. "We want respectful, quiet rentals without parties."
TurnKey competes with traditional property management firms. TurnKey charges 18 percent of bookings, which would mean $36 for a $200-a-night rental.
The company, which has 140 employees, hopes to enter 100 new U.S. markets over the next couple of years, Clark said.
TurnKey is also hiring, mainly in sales and marketing, with plans to add 100 workers over the next year.