NEW YORK--(BUSINESS WIRE)--Obligo Inc., a financial technology company serving the real estate market, announced that it has completed a $5 million financing round. Obligo has developed a new financial standard to replace the security deposit – the large sum of money required when renting an apartment. Under this new standard, tenants would provide landlords with a limited billing authorization instead of a cash deposit, allowing landlords to bill them for any damages incurred at the end of tenancy. This billing authorization relies heavily on state-of-the-art Open Banking technology, and is backed by a novel credit-based capital structure. Obligo’s solution has been developed in collaboration with Silicon Valley Bank’s New York City FinTech team.
The seed round was led by 83 North (formerly Greylock IL) and included investments from Entrée Capital and HFZ Capital, in addition to a $2 million credit facility from Viola Credit. Proceeds will be used to drive new client acquisition, meet the growing demand for deposit-free leasing, and further advance the development of Obligo’s cutting edge underwriting and payment technology.
The financing arrives in conjunction with the commencement of two new landlord partnerships that will help launch the company 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. Obligo has plans to scale nationwide following its initial launch in the New York residential real estate market.
“With a traditional deposit, you’re paying a huge sum in advance for damage that likely won’t happen. It’s wasteful and completely unnecessary, considering what’s possible with modern financial technology,” said Obligo CEO and Co-Founder Omri Dor. “What Obligo offers is a common-sense approach. Tenants should only pay for damages if they actually cause damages.”
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. This credit-based model allows Obligo to protect the landlord from the risk of tenant default, while simultaneously ensuring that tenants won’t be faced with paying large claims upfront. The subscription for a $2,500 billing authorization will start at $9.90 per month, ridding the tenant from the burden of paying the equivalent cash deposit.
“Many around the world have recognized 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.”
Added Obligo President and Co-Founder Roey Dor, “New York tenants and landlords understand better than anyone how burdensome the antiquated security deposit system can be. Obligo tenants are free to invest these unlocked funds or use them to repay student debt. At the same time, landlords receive a compelling value-add that they can deliver to tenants while reducing admin and retaining both security and accountability.”
Founded by brothers Omri Dor and Roey Dor, Obligo is a New York City-based financial technology company that is harnessing state-of-the-art Open Banking technologies to relieve both tenants and landlords from the unnecessary burden of security deposits. In lieu of a cash deposit, tenants now have the ability to offer landlords “an Obligo” – a limited, credit-backed billing authorization which enables landlords to bill tenants at the end of the tenancy. To learn more about Obligo, visit www.myobligo.com.
About 83 North
83North started life as Greylock IL, an affiliate fund of Greylock Partners. Today, 83North is an independent firm investing in European and Israeli entrepreneurs. 83North is committed to help build global leading companies, with more than half of its portfolio companies having operations in the US.
About Entrée Capital
Entrée Capital, with offices in Israel, UK, and the US, was founded in 2009 to provide multi-stage funding to innovative seed, early and growth stage companies all over the world. Entrée Capital manages over $300m across a number of funds and its portfolio includes over 60 investments world-wide.
About Viola Credit
Viola Credit is Israel’s leading private credit fund offering multi-strategy credit products to growing companies. The fund provides cutting-edge, custom credit solutions to mid, late and growth-stage technology-focused companies. Since 2000, Viola Credit has successfully completed over 120 transactions and committed over $800 million to Israeli and non-Israeli companies with substantial revenue and growth momentum. Viola credit is part of Viola group, Israel’s leading technology oriented investment group with over $2.8B assets under management.