A London-based startup founded by former executives from Uber and Gett has secured £69 million in a new funding round to accelerate its acquisition of independent real estate agencies across the United Kingdom. The company, Dwelly, aims to modernize the fragmented property lettings market by integrating artificial intelligence into the operations of traditional agencies.
The funding is composed of £32 million in equity and a £37 million debt facility. This capital injection will fuel the company's strategy of purchasing existing agencies and layering its technology on top of their operations to improve efficiency and service.
Key Takeaways
- Dwelly raised a total of £69 million ($93 million) in a mix of equity and debt financing.
- The company acquires traditional UK real estate agencies and integrates its AI-powered operating system.
- Dwelly has already acquired 10 agencies and manages over 10,000 properties.
- The goal is to reach 50,000 properties under management by the end of the year, making it a top-five agency in the UK.
- The startup's technology has reportedly cut tenant placement time from three weeks to under two.
A New Approach to a Fragmented Market
The UK's property rental market is extensive yet highly fragmented. It consists of approximately 20,000 individual lettings firms that collectively manage around 5.5 million rental properties. These activities generate over £100 billion in annual rent and £10 billion in commissions for the agencies.
Despite the large sums involved, the industry lacks consolidation. The top 100 firms control less than 30% of the market, and many smaller agencies continue to rely on manual processes like phone calls and extensive paperwork. Dwelly's strategy is to acquire these small to medium-sized businesses and introduce a centralized, AI-driven platform to streamline their day-to-day tasks.
"We have crossed 10,000 properties under management, placing Dwelly among the UK’s top 15 largest letting agencies in less than 2 years — an unseen speed of growth for letting agencies,” said Ilya Drozdov, Dwelly’s co-founder and CEO.
UK Lettings Market by the Numbers
- Number of Firms: ~20,000
- Properties Managed: 5.5 million
- Annual Rent Generated: >£100 billion
- Annual Agency Commissions: >£10 billion
The 'AI-Enabled Roll-Up' Strategy
Dwelly is employing a business model known as an "AI-enabled roll-up." This involves purchasing traditional businesses and enhancing their performance with modern technology to unlock efficiencies that were previously out of reach.
The company's co-founders explained that acquiring agencies is a more effective strategy for customer acquisition than attempting to win over landlords organically. With the average tenancy in the UK lasting about three years, opportunities to convince a landlord to switch agents are infrequent.
"Structurally, finding a landlord is pretty hard organically, just because the window of opportunity to catch a landlord untenanted is pretty hard. That’s exactly why for us, the roll-up is, in a way, tactically buying a customer base.”
The founders also considered and rejected the idea of simply selling their software to agencies. They concluded that owning the entire business is more lucrative and overcomes the reluctance of established agencies to adopt new workflows.
"If you sell the software, you get one and a half, 2% of the P&L of the agency. If you own an agency and deliver the full end-to-end service, you get 100% of the P&L,” Drozdov explained.
How the Technology Transforms Operations
When Dwelly acquires an agency, it retains the local brand name and staff to maintain community trust and presence. However, it integrates its proprietary AI-powered operating system behind the scenes to automate and optimize key functions.
Improving the Lettings Process
In the process of finding and securing tenants, Dwelly's AI handles many of the administrative burdens. This includes managing communications with prospective tenants, conducting background verifications, and organizing offers.
The company reports that its system generates an average of 10 validated offers on each property within three days, a significant increase from the one or two offers a traditional agency might receive. This efficiency has reduced the time it takes to find a tenant from an industry average of three weeks to under two weeks.
Streamlining Property Management
On the property management side, the technology focuses on maintenance issues. An AI-powered chatbot system is used to triage tenant requests 24/7, ensuring that problems are logged and categorized immediately.
The system also actively tracks the progress of maintenance jobs, sending follow-ups to contractors to prevent delays. This has resulted in a reduction of the average maintenance resolution time from 50 days down to 20 days, with an internal goal to lower it further to just 10 days.
Empowering Agents, Not Replacing Them
Co-founder Dan Lifshits emphasized that the technology is designed to augment, not replace, human agents. He noted that in a typical agency branch, the majority of staff are desk-bound, managing emails and calls. Dwelly's AI automates these workflows, freeing up employees to focus on tasks like property viewings and building client relationships.
Ambitious Growth and Future Plans
With the new funding, Dwelly plans to rapidly expand its portfolio. The company currently manages properties with a gross rent value exceeding £200 million. Its immediate target is to reach 50,000 properties under management by the end of this year.
Achieving this goal would position Dwelly as one of the top five largest letting agencies in the UK. This rapid expansion will also lead to significant job growth, with the company projecting its headcount could grow from nearly 300 to over 1,500 by the year's end as more agencies are acquired.
The lead investor in the equity round, Silicon Valley venture capital firm General Catalyst, sees significant potential in the model. Zeynep Yavuz, a partner at the firm, stated that Dwelly is converting "thousands of analogue, agency-level processes into scalable software, improving tenant experience, landlord economics, and agency efficiency all at once.”
While the current focus remains on the UK, Dwelly has long-term ambitions for international expansion, with Western Europe and the United States on the horizon.
