Our start-up of the week is Deposify, a new venture that aims to bring trust back to the landlord and tenant relationship.
Deposify started with the idea that paying and holding rental deposits and resolving deposit-related disputes causes problems for landlords, tenants and letting agents, explained Tracy Keogh, a member of the operations team at the company.
“Deposify works by holding the rental deposit on behalf of the landlord and tenant and with its built-in dispute resolution process resolves deposit-related disputes in weeks.
“Deposify also helps solve the compliance obligations on landlords and letting agents created by holding rental deposits.”
As anyone in Dublin or even San Francisco will tell you, it is a fraught time in the rental market, where rising rents in a resurgent economy are complicating what should be a harmonious relationship between landlords and tenants.
“The problem is the same for landlords, tenants and letting agents – which is balancing the competing interests between all the actors,” Keogh explained. “In law, the deposit is the property of the tenant and the landlord simply has a right to claim against it.
“The convention evolved where the tenant paid the deposit to the landlord, which is where the problems start. And at its heart is the breakdown in trust and communication between landlords and tenants.
“So tenants don’t trust landlords to repay the deposit and get the retaliation in first by failing to pay the last month’s rent — leaving the landlord to meet any repair costs. For the tenant, many landlord’s hold the deposit and co-mingle with their own funds, meaning the deposit is spent when needed and landlords engineer disputes so as not to repay. For letting agents, handling cash is an issue, especially given the increased compliance requirements with the establishment of the Property Services Authority.
“And if there’s a dispute, you end up in a lengthy adversarial legal process, which we think is over engineered, taking many months, sometimes as long as 18 months, to resolve — for effectively low-value claims that should be resolved quickly and cheaply so people can move on.”
Keogh points out that in the US tenants need to put two months rent down as a deposit, sometimes more.
As well as this, landlords are restricted from co-mingling deposits and are required to set up separate trust accounts with a local bank where the deposit is held. The problem for landlords in the US is compliance and housing court cases, which can get resolved quicker than here but are very costly.
“A further complication locally is water charges — if landlords are held liable, unlike utilities, the likelihood is, we think, that landlords will look for increased deposits to cover the risk. That just amplifies the current problems — and we don’t think that complication works well for landlords or tenants. Again, such a water deposit could be held by the tenant in a separate escrow account and claimed on by the landlord if needed. It’s doesn’t need to be complicated.”
Deposify was founded by entrepreneur Jon Bayle, who left a 10-years-plus legal career in corporate finance to make Deposify a reality.
Bayle said: “Having worked in corporate finance law, I realised that having an escrow service for deposits would be the perfect way to solve a problem I encountered as an accidental landlord — and that’s where Deposify started.”
Keogh’s experience ranges from early-stage start-up development to corporate finance at BDO.
“I was meeting start-ups regularly and didn’t expect to find my way back into a start-up. But I met Jon and the Deposify guys were getting such great traction and establishing in the US that I had to get involved — so I jumped quickly, a couple of months before launch, and took up the COO role.
Deposify is built to provide three main services — banking, dispute resolution and compliance.
“One of the core elements of our technology is our bank-level security and infrastructure when handling our clients’ money and information,” Keogh said.
“We think escrow can be an everyday thing. The applications for Deposify extend beyond landlords and tenant to services, retail, etc… Ireland has been a great base for us and we intend to keep our HQ here, but we’re back and forth to the US and that’s where we see significant scale.”
Deposify currently employs nine people and is actively hiring employees in technology, operations and sales roles throughout 2015 and beyond.
“As well as building the business and making sales, we are busy closing our next round of fundraising to help fund growth in Ireland and expansion into the US market. Deposify’s built-in regulatory compliance solution is particularly attractive in the US, where more restrictions and compliance regulations apply around the management of rental deposits.
“We’ve been busy in closed beta testing with a number of large and small letting agents who are keen to use Deposify to help them increase their sales and reduce their costs,” Keogh explained.
The intersection of life, money and tech
Keogh points out that Deposify operates in a regulated space and needed to engage with the regulatory authorities and take appropriate advice — which takes time and is very costly.
“The fintech technology hurdle is also very high — fundamentally, we’re dealing with people’s money and our tech needs to be robust, proven and scalable; this takes a significant capital expenditure investment in development and testing — which all takes time.”
As well as working with Deposify, Keogh runs two community event organisations, Startup Hiking with Andreea Wade and Startup Weekend Dublin.
“For me, the start-up community in Dublin in particular is a powerful thing. I think the willingness of large corporates like Bank of Ireland or successful start-ups like Currency Fair and Realex to support the growing community is of huge value.
“It’s also proved beneficial from a recruitment point of view. We asked ClearPreso to help with our pitch deck and they ended up introducing us to guys in the community who are now working with us.
“And Cork and Limerick are building and growing their communities fast too. Being from Galway originally, it’s really great to see John Breslin and others working on the PorterShed and Innovation District. I hope it means that we may get to see Deposify HQ back in Galway!”
The art of the start
Keogh said that the ultimate difficulty about the start-up journey is getting on the road in the first place, eschewing the comfort of full-time jobs and benefits for a march into the unknown.
“Just start — the hardest part is making the decision to do something. After that, you just have to make it happen for yourself.
“Reach out to your network — get that next meeting, talk about your idea to everybody — get feedback and keep improving the idea and your pitch.
“The start-up community here is a great asset — involve yourself and learn from it. People love getting coffee and hearing new ideas — they want to help.
“And believe — start-ups are hard. You need to put the time in — weather the wild highs and low lows, but be sure to enjoy the journey.”
Updated, 3.11pm, 28 November 2016: This article was updated to clarify Tracy Keogh’s role as part of the operations team at Deposify.