If it weren’t for WeWork’s failed IPO, Mike Romanowicz probably wouldn’t build a proptech company right now. The entrepreneur left his position as director of product management and strategic partnerships at the well-known co-working company in January.
At the time, Romanowicz was providing detailed building specifications for tiny houses—which he had started as a side hustle—bringing in a few thousand dollars in income a month. He doubled down on his idea by investing $10,000 of his own money – which he used to reboot the company under the name Den.
Pine treeLaunched in July 2020, today announced it has raised $3 million in venture capital in a round led by Gutter Capital and Crossbeam Venture Partners. It’s far less capital than some of Den’s biggest competitors have raised, including but not limited to Atmos, which raised nearly $20 million in funding, Homebound, which raised about $148 million, and Welcome, which raised nearly $35 million. million raised.
Still, Den’s founder is confident that their approach — and lean capital strategy — will help them win. While many proptech companies require a huge capital influx to build physical homes, Den’s main product is a digital platform built around a more sophisticated design and construction process. That means a client can come to Den for help with all stages of building a house, from finding a design to choosing the right land. Think less construction and more end-to-end project management.
According to him, there are two main categories of how housing is delivered in the United States: custom housing, where an individual customizes every dimension of their home, or speculative housing, a turnkey home built by developers for the purpose of buy or sell. rent the location in the future. The latter — a fully executed home — requires a different level of capitalization, he says, and the former is, well, incredibly expensive.
Den, meanwhile, wants to offer a house that is well designed with crystal clear specifications, and then guide the homeowners through the process. Romanowicz insists that very few people, even at architectural firms, don’t fully specify a house’s dimensions and let many decisions be made after the process has begun. “It creates a compounding effect that adds time and cost and takes away your ability to accurately represent when a project will end,” he said. “People are constantly promoting prefabrication as a solution, but for us, we’re trying to think about airtight specifications.”
Image Credits: Pine tree
Going back to that round of funding, however, Romanowicz says Den intends to stay asset light on purpose. The company earned revenue through digital specification plans, which he describes as a high-margin-on-asset product, before raising outside capital. He hopes the bootstrapping mentality combined with a modest first round will give the company optionality in today’s economy.
“Let’s stay asset light because it’s like a strategic advantage for us,” he said. “So our focus was on process, design, user experience, the intellectual property of the design and the technology – that means we can move faster, we don’t have to raise millions of dollars to build specialty homes and sell them at market rates …like some of the other people in the category.
Still, he did not deny that one day Den might end up more in the purchasing world. Options for monetization in the future, he said, could be anything from generating income from the sale of a property to purchasing to financing and financial services around various types of insurance, from homeowners to builders. “We have a lot of problems, challenges to get through before we can even scratch that itch.”
Today, the biggest hurdle is the “operational challenge to stay focused”. Fortunately, he thinks the market is ready.
“There are large groups in development, state by state, that really just need a better marketing and customer acquisition engine,” he said. “And that’s what we’re here to provide.”
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