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Nicholas Doyle - nsdoyle.com Nicholas Doyle

Common Raises More Money for Its Fancy Millennial Dorms

Jun 15, 2016

When Brad Hargreaves was helping run technical education upstart General Assembly in New York City, he observed that many of the twenty-something students lived in multi-bedroom apartments with roommates they found through Craigslist. The problem, he speculated, was that if one of these roommates moved it, there was a burden on the rest to find a replacement. There was also the question of who furnished the apartment, and what to do if one roommate moves out with the couch that sits in the living room.

Hargreaves wanted to make living spaces more adaptable to singles living in urban areas like New York City, who need a bedroom, are strapped for cash, but don't mind living with other people. His brainchild is Common, a series of group living developments in Brooklyn, New York, and soon, in San Francisco and Washington D.C.

Hargreaves tells Fortune exclusively that his startup has raised $16 million in Series B funding led by 8VC, with Circle Ventures, LeFrak, Solon Mack Capital, Ron Burkle’s Inevitable Ventures, and Wolfswood Partners all participating. In addition, existing investors including Maveron, Lowercase Capital, Slow Ventures, and Pierre Lamond are contributing to the round. This brings his total funding to just under $25 million.

Common partners with real estate developers to create group living spaces where millennials can rent out a bedroom and share commons areas such as living space, bathrooms and kitchens with fellow roommates. Since launching a year ago, Common has three homes in Brooklyn, that offer 100 bedrooms. Since debuting last year, Common had 5,000 applications for those bedrooms and is currently at capacity.

The range for renting a bedroom is $1,300 to $2,700 per month with a 12-month agreement. The price depends on the bedroom's size as well as whether it comes with a private bathroom. Common's rates fall slightly below the cost renting of a one-bedroom apartment, which ranges from $2,800 to $3,300 in some neighborhoods in Brooklyn, according to TimeOut.

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But Common's rent, notes Hargreaves, includes a fully-furnished kitchens, living areas, work spaces, bathrooms, and a roof deck. Common also includes the cost of Wi-Fi and supplies such as toilet paper and paper towels. Another differentiator, explains Hargreaves, is a sense of community with Common. Each housing unit has a dedicated Slack channel where users can message each other to make dinner together. There are also group-organized events for residents to meet and mingle.

Technology plays a big role in Common's residences. Applicants apply online and could be approved within 15 minutes. They can then sign the lease online and sync a bank account for direct deposit for rent. Each residence includes smart Nest thermostats, smart LED lightbulbs, and Bluetooth-enabled keyless locks that can be unlocked with a keycard or even an Apple Watch.

Hargreaves posits the success of the Brooklyn projects is what garnered interest from real estate developers to expand Common to San Francisco and Washington D.C, and homes in these areas are expected to open in the next year.

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Common isn't actually funding the project itself. Real estate developers actually pay to build the homes, and Common acts as the management company. Common gets paid a fee by the developers as well as a percentage of rent. The company did not reveal its revenue.

Common has competition in the co-living space. Co-working giant WeWork is also expanding to offering shared living spaces with similar pricing to Common.

Despite going head to head with WeWork, Hargreaves is optimistic. "This is a big market, and the San Francisco and D.C. residential opportunity is massive. There's more than enough space to have a few players in this market," he says.

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