Bad tenant sparks startup

A bad tenant was the spark of inspiration for a UBC Okanagan grad, whose startup business is now growing by 250 per cent monthly and garnering big investment from multiple sources.

Dylan Lenz started Naborly in November 2014 with two friends from university, after a bad tenant cost him thousands of dollars.

“I got really bad tenants upstairs that cost me $22,000 in property damage, eviction fees, legal fees, it was just this really, really bad experience,” Lenz said. “I was like, there's got to be a better way to do this.”

Lenz, who was born in Kelowna and completed his computer science degree at UBC Okanagan on a full ride scholarship, wanted to figure out a software approach to his problem.

He created Naborly, which uses artificial intelligence software to analyze information about a potential tenant for a landlord. The software then determines if the tenant will be a good fit for the landlord, providing an overall “chance of success” percentage, along with the risk of property damage, late rent and eviction.

“We analyze things like census data, distance to where you work, macroeconomic trends like price of gas, how the economy is doing locally versus nationally and we're able to predict accurately how good a tenant is going to be, what the risk of them being evicted is, the chance of them being late on rent payment, all that kind of stuff,” Lenz said.

He said more traditional tenant checks, like credit checks, aren't good indicators of a successful tenant.

“There's really not a correlation between having good credit and being a good tenant, in fact, a lot of really good tenants have bad credit,” Lenz said. “University students tend to have bad credit, but they actually are really good tenants.

“We wanted to find a way to remove the biases landlords have and at the same time figure out an automated process that would accelerate the screening process as well.”

Early on, Lenz knew the people he wanted to have on board.

Lenz, Zeke Kan and Anastasia Fox all met in the first two weeks of school at UBC Okanagan in 2010, and quickly developed strong friendships.

“When this kind of happens, you kind of make a list of all the smart people you know, and who you want to work with and who you can stand being in a room with for 15 hours a day, and those were the two people at the top of my list,” Lenz said.

Naborly now has 8,500 landlords using their site with over 100,000 rental units being managed in Canada, and they now employ three additional employees.

In January 2015, Lenz, Kan and Fox moved to Toronto, and really got their business off the ground.

“For early companies, being close to your customers and having that user base that is going to rapidly give you feedback, that was one of the things we were missing,” Lenz said. “When we left and went to Toronto, 90 per cent of our business in Canada exists within 50 miles of where we work.”

Additionally, Lenz says there are far more investment opportunities in large cities like Toronto and Vancouver for small startups.

“Unless you're flying out every week, or you already have a connection, it's really, really difficult,” Lenz said.

A new investment fund in the Okanagan is hoping to counter this problem. Atrium Ventures Inc. is a $5 million investment fund recently created by the Southern Interior Development Initiative Trust, Interior Savings Credit Union and a number of “angel investors,” to nurture early stage companies in the technology sector.

“A long-time challenge facing all founders of early stage tech companies and, specifically, companies based in the Okanagan where there is no established venture capital presence, is access to a formalized funding source,” said Jeff Keen, fund manager at Wheelhouse Management. “Many times these founders are forced to seek capital outside the local community and we aim to change that.”

Despite the city's push to grow the tech sector in Kelowna, Lenz says being based in a big city is invaluable.

“People in the 60s and 70s used to start bands and now they start startups. In the 60s and 70s you moved to L.A., you moved to New York to make it big,” he said. “It's the same thing with startups today, you've got to go where the money is, where the customers are and where the talent is.”

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