Frontdesk

Frontdesk, a short-term rental property management startup founded in 2017, laid off its entire 200-person workforce on January 2, 2024, after failing to raise additional capital.¹³⁴⁵ The company managed more than 1,000 furnished apartments across the United States and had raised about $26 million from investors such as JetBlue Ventures, Veritas Investments, and Sand Hill Angels.¹³ Frontdesk filed for a state receivership, an alternative to bankruptcy, and shut down its short-term rental management business.¹²³

Timeline

Money raised

Frontdesk raised about $26 million from investors such as JetBlue Ventures, Veritas Investments and Sand Hill Angels, according to Crunchbase.¹ Frontdesk raised more than $26M in funding from the likes of Veritas Investments, JetBlue Ventures and Sand Hill Angels since its foundation in 2017.³ Frontdesk raised $4.89 million of Series B-3 venture funding from undisclosed investors on June 12, 2023, putting the company’s pre-money valuation at $53 million.¹¹ To date, the company has raised $28.70 million in capital.¹¹ Frontdesk closed a $6.8 million Series A round in a mix of debt and equity.¹⁴ Frontdesk raised a $2.75 million bridge round in the summer of 2019.¹⁴ Frontdesk secured $7 million in a venture capital round last August.⁸ Frontdesk landed $13 million in Series B financing led by Stormbreaker Ventures.¹³

Investors named in the sources: JetBlue Ventures¹³, Veritas Investments¹³, Sand Hill Angels¹³, Stormbreaker Ventures¹³, Motivate Venture Capital¹⁰, Lancaster Investments¹⁰, Stormbreaker Venture Group¹⁰, SKY VC¹⁰.

What happened

Frontdesk was founded in 2017 in Milwaukee, Wisconsin.¹¹⁰¹¹ The company managed more than 1,000 furnished apartments across the United States.¹ Frontdesk operated in more than 30 markets.¹ Frontdesk operated in 35 U.S. markets with over 1000 units in more than 150 buildings.¹¹ Frontdesk operated in 28 cities with over 500 serviced apartment suites.¹⁴

Frontdesk's business model involved leasing apartments at market rental rates and furnishing them for short-term rentals.¹³ The business model struggled largely due to the upfront costs involved, associated capital expenditures and variables in demand and rates.¹ Frontdesk acquired smaller rival Zencity seven months before the layoffs.¹ Frontdesk previously acquired over 100 units across several cities from WanderJaunt, Stay Alfred, Lyric and Domio.¹ Frontdesk went out for a bridge round, attempting to sell investors on a new plan of doing full building management.¹

The bridge round attempt failed and the company couldn't keep operating.¹ Frontdesk laid off its entire 200-person workforce on Tuesday, January 2, 2024.¹³⁴⁵ The layoffs included full-time, part-time workers and contractors.¹³ The layoffs occurred during a two-minute Google Meet call.¹³⁵ CEO Jesse DePinto told employees that Frontdesk would be filing for a state receivership, an alternative to bankruptcy.¹³

Frontdesk shut down its short-term rental management business.² The company was not able to make rent on a number of properties.¹ The company had little to no communication with the reportedly infuriated landlords.¹ Frontdesk had posted on LinkedIn openings for several jobs, including a chief of staff role, just two months before the layoffs.¹ Frontdesk previously had to lay off 35 of its 241 workers as a way to conserve cash during the coronavirus pandemic.¹⁴

More than 60,000 people had stayed as guests since the company's founding in 2017.¹⁴ Frontdesk's website remained live for a short time after the layoffs, but the likelihood was that the company would shut down very shortly.³ Frontdesk became the first tech startup to lay off employees in 2024.⁵ Frontdesk faced financial challenges and had to close down.⁷ CEO Jesse DePinto announced the closure and layoffs.⁷

Frontdesk was on the verge of shutting down after firing its entire 200-person workforce.³ Frontdesk was on the brink of shutting down after failing to raise capital to counteract the high costs of its business model.³ Frontdesk's business model involved leasing rental apartments at market rate, furnishing them, and subleasing them out as short-term rentals.³ Frontdesk was a startup that managed more than 1,000 furnished apartments across the United States.¹ Frontdesk laid off its entire 200-person workforce Tuesday after attempts to raise more capital failed.¹

The mass layoff came just seven months after the Milwaukee, Wisconsin-based startup acquired smaller rival Zencity.¹ Frontdesk CEO Jesse DePinto told employees that Frontdesk would be filing for a state receivership.¹ Frontdesk had raised about $26 million from investors such as JetBlue Ventures, Veritas Investments and Sand Hill Angels, according to Crunchbase.¹ Frontdesk went out for a bridge round, attempting to sell investors on a new plan of doing full building management.¹ That tactic didn’t work out and the company couldn’t keep operating.¹

Frontdesk was apparently still optimistic about its ability to raise more capital; the startup had posted on LinkedIn openings for several jobs, including a chief of staff role, just two months ago.¹ As a result of all the challenges, the company was not only not able to make rent on a number of properties but had little to no communication with the reportedly infuriated landlords.¹ The startup’s business model, which is leasing apartments at market rental rates and furnishing them for short-term rentals in more than 30 markets, has struggled largely due to the upfront costs involved, associated capital expenditures and variables in demand and rates.¹ Others in the space have also had challenges, including Stay Alfred, Domio, Lyric, Zeus Living, The Guild and WanderJaunt.¹ Frontdesk previously acquired over 100 units across several cities from WanderJaunt, Stay Alfred, Lyric and Domio.¹

Where the founders are now

Frontdesk was co-founded by Jesse DePinto and Kyle Weatherly.¹⁰ Jesse DePinto was CEO of Frontdesk at the time of the layoffs.¹²³⁷ Kyle Weatherly was Co-Founder and CEO of Frontdesk in May 2020.¹⁴

Sources

1. Short-term rental provider Frontdesk lays off entire staff, on the verge of shutting down | TechCrunch, TechCrunch, 2024-01-03
2. Milwaukee startup Frontdesk files bankruptcy alternative ..., bizjournals.com, Jan 9, 202
3. Short-Term Rentals Startup Frontdesk Fires Entire Workforce In "Two-Minute Call" | Online Marketplaces, Online Marketplaces, 2024-01-04
4. Rentals startup Frontdesk lays off all staff after failed ..., inman.com, Jan 3, 202
5. Startup Frontdesk lays off entire staff over 2-minute 'Google ..., moneylife.in
7. FrontDesk's Unexpected Closure: A Pandemic Survivor's ..., rentalscaleup.com, Jan 15, 20
8. Frontdesk secures $13m in Series B funding round, Short Term Rentals, 2022-09-13
10. Frontdesk, Inc. Asset Profile | Preqin, preqin.com
11. Wisconsin VC Funding for June 2023 - mkestartup.news, mkestartup.news, 2023-07-17
13. Short-term rental company Frontdesk scores $13M for ..., phocuswire.com, Sep 13, 20
14. Frontdesk Raises About $6 Million for Short-Term Rentals: Travel Startup Funding This Week, Skift, 2020-05-01
15. Frontdesk lays off staff and faces collapse, Short Term Rentals, 2024-01-03

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