'I Think Going Public Is an Option': AvantStay's CEO on What's Next After $160M Raise
As the world emerged from the pandemic earlier this year, the well-off didn’t hold back on bookings at AvantStay Inc.’s high-end homes for family retreats or celebrating with friends.
While traditional hotel chains were decimated by a precipitous drop off in overnight stays, the West Hollywood-based staycation business is seeing booming times in many of its far-flung, short-term rental spots that are short drives from big metropolitan areas or in hidden Shangri-Las.
For instance, it offers luxury-living everywhere from California’s Paso Robles wine country, where a seven-bedroom home with four bathrooms and an Olympic-sized swimming pool rents for $2,765 a night, to $659 a night for a two-bedroom ocean view bungalow on Hawaii’s Oahu island.
These aren’t shacks, either.
The homes have everything from hot tubs and pools to fire pits and keyless entry for security. The average daily rate that travelers are willing to pay to stay at one of these mansions is $880, with groups of seven as the average number of guests – equating to $120 per person.
It’s comparable to staying in a four- or five-star hotel at a fraction of the price, said Sean Breuner, the company’s chief executive officer and co-founder. “It’s a much cheaper and affordable experience.”
Investor appetite in the niche is intense.
Swimply, a New York-based online marketplace for renting a private swimming pool as a form of staycation, raised $40 million in funding this week.
AvantStay CEO Sean Breuner
Some short-term rental firms also have gone public in recent months – including Sonder Corp., which runs a San Francisco-based boutique apartment-hotel hospitality company, and Vicasa, a Portland, Ore.-based international vacation rental management services business that went public on Dec. 7.
There’s a good chance that AvantStay will go the same route.
“Absolutely. I think going public is an option for us,” said Breuner in an interview.
This week, AvantStay raised $160 million in a Series B round of funding to help the platform decorate – called “kitting out” in industry parlance -- its palatial homes and list the properties owned by others to rent out for vacations or other short-term stays. It partnered with the 800-pound gorilla in the space, AirBnb Inc., as the short-term rental giant tries to diversify into other lines of business.
Tarsadia Investments and 3L Capital co-led the latest round, with participation also from previous backers Plus Capital, Bullpen Capital and Convivialite.
AvantStay’s rentals include a Who’s Who list of destination hotspots for globetrotters: ski-town Park City, Utah; luxurious skiing towns Breckenridge and Vail in Colorado’s Rocky Mountains; music night hotspot Austin, Texas; and coastal California beach cities for the rich and famous in Malibu and Newport Beach.
The company employs roughly 400, but expects to double or triple the size of the workforce over the next 18 months, and double the number of cities its homes are located from 100 to 200, according to Breuner.
“It’s a move in the direction where people want these large private spaces versus crowded hotels, and where they’re looking for a seamless travel experience,” Breuner said.
Jamie Lane, vice president of research with AirDNA, a Denver-based short-term rental data and analytics company, observed that travelers want to escape the crowds and not worry about catching the COVID-19 virus or wearing masks, he said.
“Most of these destination resorts are still getting their peak season revenue, which has been better than ever. We’re seeing them extend their seasonality so that they’re getting revenue over a much wider period, which makes these types of homes and rentals much more profitable,” Lane said.
“What we’ve seen is demand for short-term rentals has done better than anyone could ever have imagined,” he said.
“Overall, traditional hotels are still talking about getting back to 2019 levels,” added Lane, who noted that short-term rentals last month were 15% above levels seen two years ago.
The average daily rates for short-term rentals is roughly $248 a night, which is about 30.1% higher than November 2019’s average, he said.
“AvantStay’s markets are doing fine. They got lucky because they weren’t going after the urban markets,” said Lane, noting that the company is one of the few that has a national footprint.
He cited some in three short-term rental space that haven’t been so fortunate.
Lyric, a San Francisco-based short-term rental startup that raised $180 million from Airbnb and other investors, shut its doors in July 2020.
Washington-based Stay Alfred shut its doors in May 2020 and New York-based Domio, an apartment-hotel rental service catering to group travelers, closed down in November 2020.
Correction: An earlier version of this post misspelled CEO Sean Breuner's name.
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Though Silicon Valley is still very much the capital of venture capital, Los Angeles is home to plenty of VCs who have made their mark – investing in successful startups early and reaping colossal returns for their limited partners.
Who stands out? We thought there may be no better judge than their peers, so we asked 28 of L.A.'s top VCs who impresses them the most.
The list includes many familiar names. Dana Settle, founding partner of Greycroft, and Mark Mullen, founding partner of Bonfire Ventures, garnered the most votes.
Settle manages West Coast operations for Greycroft, a New York firm with $1.8 billion in assets under management. She is one of only nine of the top 100 VCs nationally who are women, according to CB Insights.
Mullen is a founding partner of Bonfire Ventures, which closed a $100 million second fund in September to continue funding seed stage business-to-business (B2B) software startups. Mullen has also been an angel investor and is an LP in other funds focusing on other sectors, including MaC VC and BAM Ventures.
Below is the list of the top ranked investors by how many votes each received from their peers. When there was a tie, they appear in alphabetical order according to their last name:
Mark Mullen, Bonfire Ventures
Mark Mullen is a founding partner of Bonfire Ventures. He is also founder and the largest investor in Mull Capital and Double M Partners, LP I and II. A common theme in these funds is a focus on business-to-business media and communications infrastructures.
In the past, Mullen has served as the chief operating officer at the city of Los Angeles' Economic Office and a senior advisor to former Mayor Villaraigosa, overseeing several of the city's assets including Los Angeles International Airport and the Los Angeles Convention Center. Prior to that, he was a partner at Daniels & Associates, a senior banker when the firm sold to RBC Capital Markets in 2007.
Dana Settle, Greycroft
Dana Settle is a founding partner of Greycroft, heading the West Coast office in Los Angeles. She currently manages the firm's stakes in Anine Bing, AppAnnie, Bird, Clique, Comparably, Goop, Happiest Baby, Seed, Thrive Market, Versed and WideOrbit, and is known for backing female-founded companies.
"The real change takes place when female founders build bigger, independent companies, like Stitchfix, TheRealReal," she said this time last year in an interview with Business Insider. "They're creating more wealth across their cap tables and the cap tables tend to be more diverse, so that gives more people opportunity to become an angel investor." Prior to founding Greycroft, she was a venture capitalist and startup advisor in the Bay Area.
Erik Rannala, Mucker Capital
Erik Rannala is a founding partner at Mucker Capital, which he created with William Hsu in 2011. Before founding Mucker, Rannala was vice president of global product strategy and development at TripAdvisor and a group manager at eBay, overseeing its premium features business.
"As an investor, I root for startups. It pains me to see great teams and ideas collapse under the pressure that sometimes follows fundraising. If you've raised money and you're not sure what comes next, that's fine – I don't always know either," Rannala wrote in a blog post for Mucker.
Mucker has a portfolio of 61 companies, including Los Angeles-based Honey and Santa Monica-based HMBradley.
William Hsu, Mucker Capital
William Hsu is a founding partner at the Santa Monica-based fund Mucker Capital. He started his career as a founder, creating BuildPoint, a provider of workflow management solutions for the commercial construction industry not long after graduating from Stanford.
In an interview with Fast Company, he shared what he learned in the years following, as he led product teams at eBay, Green Dot and Spot Runner, eventually becoming the SVP and Chief Product Officer of At&T Interactive: "Building a company is about hiring correctly, adhering to a timeline, and rigorously valuing opportunity. It's turning something from inspiration and creative movement into process and rigor."
These are the values he looks for in founders in addition to creativity. "I like to see the possibility of each and every idea, and being imaginative makes me a passionate investor."
Jim Andelman, Bonfire Ventures
Jim Andelman is a founding partner of Bonfire Ventures, a fund that focuses on seed rounds for business software founders. Andelman has been in venture capital for 20 years, previously founding Rincon Venture Partners and leading software investing at Broadview Capital Partners.
He's no stranger to enterprise software — he also was a member of the Technology Investment Banking Group at Alex. Brown & Sons and worked at Symmetrix, a consulting firm focusing on technology application for businesses.
In a podcast with LA Venture's Minnie Ingersoll earlier this year, he spoke on the hesitations people have about choosing to start a company."It's two very different things: Should I coach someone to be a VC or should I coach someone to enter the startup ecosystem? On the latter question, my answer is 'hell yeah!'"
Josh Diamond, Walkabout Ventures
Josh Diamond founded Walkabout Ventures, a seed fund that primarily focuses on financial service startups. The firm raised a $10 million fund in 2019 and is preparing for its second fund. Among its 19 portfolio companies is HMBradley, which Diamond helped seed and recently raised $18 in a Series A round.
"The whole reason I started this is that I saw there was a gap in the funding for early stage, financial service startups," he said. As consumers demand more digital access and transparency, he said the market for financial services is transforming — and Los Angeles is quickly becoming a hub for fintech companies. Before founding Walkabout, he was a principal for Clocktower Technology Ventures, another Los Angeles-based fund with a similar focus.
Kara Nortman, Upfront Ventures
Kara Nortman was recently promoted to managing partner at Upfront Ventures, making her one of the few women – along with Settle – to ascend to the highest ranks of a major VC firm.
Though Upfront had attempted to recruit her before she joined in 2014, she had declined in order to start her own company, Moonfrye, a children's ecommerce company that rebranded to P.S. XO and merged with Seedling. Upfront invested in the combination, and shortly after, Nortman joined the Upfront team.
Before founding Moonfrye, she was the SVP and General Manager of Urbanspoon and Citysearch at IAC after co-heading IAC's M&A group.
In an interview with dot.LA earlier this year, she spoke on how a focus for her as a VC is to continue to open doors for founders and funders of diverse backgrounds.
"Once you're a woman or a person of color in a VC firm, it is making sure other talented people like you get hired, but also hiring people who are not totally like you. You have to make room for different kinds of people. And how do you empower those people?"
Brett Brewer, Crosscut Ventures
Brett Brewer is a co-founder and managing director of Crosscut Ventures. He has a long history in entrepreneurship, starting a "pencil selling business in 4th grade." In 1998, he co-founded Intermix Media. Under their umbrella were online businesses like Myspace.com and Skilljam.com. After selling Intermix in 2005, he became president of Adknowledge.com.
Brewer founded Santa Monica-based Crosscut in 2008 alongside Rick Smith and Brian Garrett. His advice to founders on Crosscut's website reflects his experience: "Founders have to be prepared to pivot, restart, expect the unexpected, and make tough choices quickly... all in the same week! It's not for the faint of heart, but after doing this for 20 years, you can spot the fire (and desire) from a mile away (or not)."
Eva Ho, Fika Ventures
Eva Ho is a founding partner of Fika Ventures, a boutique seed fund, which focuses on data and artificial intelligence-enabled technologies. Prior to founding Fika, she was a founding partner at San Francisco-based Susa Ventures, another seed-stage fund with a similar focus. She is also a serial entrepreneur, most recently co-founding an L.A. location data provider, Factual. She also co-founded Navigating Cancer, a health startup, and is a founding member of All Raise, a nonprofit that supports and provides resources to female founders and funders.
In an interview with John Livesay shortly before founding Fika, Ho spoke to how her experience at Factual helped focus what she looks for in founders. "I always look for the why. A lot of people have the skills and the confidence and the experience, but they can't convince me that they're truly passionate about this. That's the hard part — you can't fake passion."
Brian Lee, BAM Ventures
Brian Lee is a co-founder and managing director of BAM Ventures, an early-stage consumer-focused fund. In an interview with dot.LA earlier this year, Lee shared that he ended up being the first investor in Honey, which was bought by PayPal for $4 billion, through investing in founders and understanding their "vibe."
"There's certain criteria that we look for in founders, a proprietary kind of checklist that we go through to determine whether or not these are the founders that we want to back…. [Honey's founders] knew exactly what they were building, and how they were going to get there."
His eye for the right vibe in a founder is one gleaned from experience. Lee is a serial entrepreneur, founding LegalZoom.com, ShoeDazzle.com and The Honest Company.
Alex Rubalcava, Stage Venture Partners
Alex Rubalcava is a founding partner of Stage Venture Partners, a seed venture capital firm that invests in emerging software technology for B2B markets. Prior to joining, he was an analyst at Santa Monica-based Anthem Venture Partners, an investor in early stage technology companies. It was his first job after graduating from Harvard, and during his time at Anthem the fund was part of Series A in companies like MySpace, TrueCar and Android.
He has served as a board member in several Los Angeles nonprofits and organizations like KIPP LA Schools and South Central Scholars.
"Warren Buffett says that he's a better businessman because he's an investor, and he's a better investor because he's a businessman. I feel the same way about VC and value investing. Being good at value investing can make you good at venture capital, and vice versa," Rubalcava said in an interview with Shai Dardashti of MOI Global.
Mark Suster, Upfront Ventures
Mark Suster, managing partner at Upfront Ventures, is arguably L.A.'s most visible VC, frequently posting on Twitter and on his blog, not only about investing but also more personal topics like weight loss. In more normal years, he presides over LA's biggest gathering of tech titans, the Upfront Summit. Before Upfront, he was the founder and chief executive officer of two software companies, BuildOnline and Koral, which was acquired by Salesforce. Upfront backed both of his companies, and eventually he joined their team in 2007.
In a piece for his blog, "Both Sides of the Table," Suster wrote about the importance of passion — not just for entrepreneurs and their businesses, but for the VCs that fund them as well.
"On reflection of the role that I want to play as a VC it is clearly in the camp of passion. I really want to start my journeys only with people with whom I want to work closely with for the next 5–7 years or more. I only want to work on projects in which I believe can produce truly amazing change in an industry or in the world."
Lead art by Candice Navi.
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Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
Pejman Nozad, a founding managing partner at Pear VC, joins this episode of LA Venture to discuss Pear VC's current initiatives, including its accelerator and fellowships. He's seen as one of the most successful angel investors in the area, and for good reason: he has made more than 300 investments in his lifetime.
"I'm a child of revolution and war and difficult times," said Nozad of his upbringing in Iran during the revolution.
Nozad went to college before dropping out. That's when his brother told him about his dream to go to America. After his brother was denied a visa multiple times, Nozad went himself to the embassy and got lucky; the woman in charge of the process liked him enough to approve him.
"When you're in [your] early twenties, you don't analyze much of the future. And then your risk-takers. I came to America in 1992 with $700 and I didn't speak any word of English," said Nozad.
Nozad went from working at a carwash, then a yogurt shop, to a (now famous) Persian rug store in Palo Alto. Many of his clients happened to be CEOs and venture capitalists; Nozad wanted to be part of that community.
"I was very lucky because I had access to people who normally nobody can see them, but I was hanging out with them at Sunday barbecues while selling carpets," said Nozad.
In his early days as an investor, Nozad bet on companies that included Dropbox and DoorDash. He said he took inspiration as a venture capitalist in lessons he learned from his time playing professional soccer in Iran.
"In soccer, you can score minute one, or you can score at minute 90. Both of them [are] one goal and you can win the game. So, when you go to fundraise, don't get disappointed if you hear a lot of nos, because the yes could be the last meeting after the whole two months," he said.
dot.LA Engagement Intern Joshua Letona contributed to this post.
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