Blueground’s Successful Business Model: Generating $560M in Revenue with $45M Boost in Latest Funding Round

Alex Chatzieleftheriou had a problem. As a consultant for McKinsey, he was constantly traveling and living in hotel rooms for extended periods of time. However, he desired the comfort and convenience of a furnished apartment, but struggled to find short-term options in Europe. This frustration led him to found Blueground in 2013.

“One time the company had to pay up to €15,000 for a hotel room in Amsterdam. And there wasn’t enough space nor a kitchen to cook,” he explained. “I tried renting apartments for a month or more. But it was difficult, and landlords weren’t open to buying furniture. So I had created a business that would solve my problem.”

Years later, when the pandemic hit and remote work became the norm, Blueground found itself in a booming market for temporary, furnished apartment rentals as people looked for places to live and work remotely. However, as companies start to call employees back to the office, the demand for temporary housing has decreased.

Sadly, some of Blueground’s competitors did not survive the downturn, such as Zeus Living and WanderJaunt who were forced to shut down and return their keys. But for Blueground, the pandemic also presented acquisition opportunities. In 2022, they gained a strong foothold in Latin America through the acquisition of Tabas, an operator of over 9,000 furnished apartments in Brazil. Shortly after, they also acquired Travelers Haven, a 15-year-old business that provides temporary housing in nearly 20,000 cities across the United States. And in 2023, Blueground added Nestpick, a marketplace for furnished apartment operators, to their portfolio, giving customers access to an additional 18,000 apartments.

Currently, Blueground manages a global network of move-in ready homes for stays of a month or more, and has recently secured $45 million in Series D funding from new investor Susquehanna Private Equity Investments, as well as other backers including WestCap. They also obtained a debt facility from Barclays with participation from Morgan Stanley, Deutsche Bank, and HSBC. This funding replaces and upsizes the $40 million of debt they previously obtained from Silicon Valley Bank in 2021.

Blueground operates by leasing apartments in popular neighborhoods and furnishing them for renters. They currently manage 15,000 apartments in 32 markets across 17 countries. In addition to these leases, they have also introduced a franchise model that partners with local operators in Japan and Thailand, and lists units from third-party operators on their platform.

While Blueground did not disclose their new valuation, Chatzieleftheriou hinted that it has increased since their previous round. In September 2021, they raised a $140 million Series C, giving them a reported valuation of $750 million.

Despite the challenging fundraising environment, especially in the proptech sector, Blueground’s fast growth and near-profitability helped convince investors to provide additional funding. Chatzieleftheriou stated that their sales increased by 70% in 2023, reaching $560 million in gross revenue compared to $300 million in the previous year. Their net sales margin, after paying landlords for leases, is approximately 35%. And with positive cash flow expected in 2024, Blueground is looking towards the future.

While further acquisitions may be on the horizon, Chatzieleftheriou’s immediate focus is integrating the recent purchases into the company. This new funding will also go towards market expansion, technology investments, and potentially the ultimate goal: an IPO.