Skift Take
Justin Dawes
Ezra Gershanok and Jacob Halbert were barely making any money from their apartment sublease startup before this spring.
Over the next two months, 1,000 new listings were listed on the platform in New York City, and sales in May jumped to $1.2 million, the founders say, a growth they attribute to Local Law 18, the new regulations on short-term rentals that went into effect last fall.
The startup, called Ohana, aims to connect hosts and guests in the medium-term rental market, defined as stays ranging from 30 days to 12 months. The platform facilitates introductory video calls between the parties, along with sublease agreements and payments.
“We saw explosive growth in the spring because a lot of people were coming to New York City in the summer and Local Law 18 created a surge in supply,” Gershanok said from the Hell’s Kitchen apartment the founders rent out through Ohana. “New York City needs this. We need a new legal sublease market, and we need an alternative for the 16,000 Airbnb hosts who are no longer on Airbnb.”
Local Law 18 requires short-term rental hosts in New York City to register listings for bedrooms in the unit where the host resides. Reservations must be for less than 30 days and the host must reside in the residence for the duration of the stay.
Meanwhile, all hosts, whether registered or not, can still book stays of 30 days or more.
That means some hosts have started converting short-term rentals into longer-term rentals, but concerns about squatters mean they want more vetting for long-term stays than Airbnb offers, Gershanok said.
It’s a safer bet for consumers than searching for something on Facebook Marketplace, and the founders believe people generally won’t consider Airbnb for longer-term stays. Gershanock said the surge in business is driven by word of mouth from interns who move to New York City for the summer.
Other clients include companies like Wells Fargo and Duolingo that need short-term housing for summer interns, as well as digital nomads and migrants looking to sublet while searching for a longer-term rental.
Ohana raises $3 million from former Airbnb executive
With their financial situation improving, Ohana’s founders raised a seed round of funding in May.
It only took a week.
Ohana raised $3 million in an oversubscribed funding round led by Wave Capital, a firm founded by Airbnb’s former head of corporate development Sarah Adler and former Airbnb head of data science Riley Newman.
Adler will join Ohana’s board of directors.
Adler turned down an investment in Ohana’s pre-seed round last year but said he was impressed with the company’s progress.
“We’re really excited about the particular window and niche that they’re looking to launch into because we think their approach is very different from other players and makes a lot of sense from a safety and trust standpoint for hosts and guests,” Adler said.
“We have the ability to act quickly when we get excited, especially because we’ve met with them before and we know this whole market really well.”
Other investors in the Ohana round include:
- Spencer Rascoff, co-founder and former CEO of Zillow
- Surabhi Gupta, former director of engineering at Airbnb and Robinhood
- Rex Beyer, former head of payments at Airbnb
- Eric Lefkofsky, co-founder of Groupon and managing director at venture capital firm LightBank
- Ali Partovi, CEO of venture capital fund Neo and former Airbnb investor
Ohana was founded with $1.2 million in pre-seed funding from startup accelerator Neo in 2023. Ger-Shanok said the round took 12 weeks and 108 meetings to close.
“It all comes down to finding product-market fit. If you have two investors paying you over $1 million per month, it’s a low-risk investment from a seed perspective,” Gershanok says. “Raising money was very hard until we found product-market fit, but once we had clear traction it became a lot easier.”
The seed funding will be used to hire up to eight people and expand into New York, followed by London and San Francisco.
How Ohana works
Messrs. Gershanok and Halbert previously worked together as founders of The Keeper, a pocket that attaches to the back of a cellphone to hold dorm ID cards and keys. The venture sells about 100,000 products a year to 800 bookstores.
They saw an opportunity to start Ohana after struggling to find short-term housing for their internships.
Searching for mid-term housing on Facebook or Craigslist can be a pain, and there are countless scams committed through these platforms. Victims often end up paying hundreds of dollars in deposits for apartments that don’t exist.
“So many people get scammed,” Halbert said. “There’s a real white space between Airbnb and a 12-month rental agreement.”
Ohana doesn’t pay hosts until a guest has safely moved in. Ohana also holds security deposits for seven days after a guest has moved out. Ohana uses fintech company Stripe for payment processing.
The host sets the price, Ohana takes a 5% cut and the final price is posted on the website.
The contract states that the host has permission from the landlord to sublet the space.
Most of our clients are individual tenants or own two or three apartments. One client owns 70 apartments and decided to sign with Ohana to make it easier for them to connect with summer interns.
Ohana is priced below market rate and they believe this is due to increased supply of medium-term subleases, they said.
Since March, Ohana customers have rented one-bedroom apartments for about 11% less than the average rental price of $3,789 per month, according to data from Apartments.com. Subleases of two- and three-bedroom units are also selling below market price, according to the same data.
Based on those calculations, Ohana says it has saved its more than 600 residents about $1.6 million in rent since March.
Photo credit: Pictured: Ohana founders Jacob Halbert (left) and Ezra Gershanok.
