Jul 28, 2023

LatAm: Proptech startup Casai has effectively ceased operations in Brazil and its native Mexico after its founders announced the sale of their operations and portfolio in both countries to other operators based in Latin America. In a candid letter posted on LinkedIn on Thursday by Nico Barawid, co-founder and CEO of Casai, he confirmed that the company had transferred its homes to other operators in Mexico and Brazil, including Blueground , Charlie, Wynwood House , CAPITALIA and Oasis Collections. A notice on the Casai website also read: “After four years of building new hospitality models in Mexico and Brazil, it’s time for us to say our final goodbyes. We’re so honoured to have hosted over 110,000 of you in our apartments in Mexico City, Tulum, Cabo, São Paulo, Rio de Janeiro, and Florianópolis. “We’ve transferred all of our 2,000 apartments to some incredible local operators in Mexico and Brazil that will continue to offer you amazing experiences in those cities. Always keep travelling, and we’re always here to offer recommendations on the best tacos or coxinhas,” it added. The bombshell announcement comes less than three years after Casai raised $48 million in a Series A round [following a previous $5 million seed funding round], including $23 million in equity funding and up to $25 million in debt financing from TriplePoint Capital. At the time, the round was the largest Series A raised by a company in Mexico and was one of the largest in the history of Latin America. Casai’s backers included the likes of Andreessen Horowitz, Kaszek Ventures, Monashees Capital, Global Founders Capital, Liquid 2 Ventures, Tom Stafford [managing partner of DST Global], and founders of leading startups including Nova Credit, Loft, Kavak and Runa. At the time of its founding four years ago, the brand, which translates as “smart home”, pledged to build “a new vision for hospitality in Latin America” and set a “high standard of excellence with luxurious amenities, stunning locally-sourced design and sophisticated smart technology”, while launching with an initial unit count of almost 200 in its Mexico City base. At its height, Barawid said that Casai was booking “almost US$30mm in annualised revenue”, operating “about 50 buildings with 1.6k live units and a signed pipeline of another 2k more”, spread across business centres and leisure destinations in Mexico and Brazil, and making it one of the largest short-term rental operators in terms of units globally, not just in the region. Technology was integrated into each traveller’s stay with Casai’s proprietary smart hardware hub, Butler, which connected all of the space’s smart technology to the company’s app. Through the app, guests can access keyless check-in, control smart devices including Google Home, smart lights and Chromecast-powered TVs, as well as browse local recommendations. In addition to transforming the guest experience, Casai’s technology was used in all aspects of its operation, from its decisions on scouting units to how it managed its behind-the-scenes logistics. After its landmark Series A raise in October 2020, Casai went on to expand heavily into Brazil with the acquisitions of r ental startup Roomin , access control company LoopKey , and the Brazilian operations of Danish corporate housing firm Q Apartments  as it sought to establish itself further in the Latin American accommodation market. However, the writing appeared to be on the wall exactly a year ago as Casai made at least 60 employees redundant in Brazil from a 200-strong team in the country, while at least 20 team members in Mexico also lost their jobs. Last June, Bloomberg Línea reported that Barawid had spoken to the entire company, telling employees that the startup was running out of money and recommending that people search for new jobs. According to those affected by the job cuts, former employees would receive proposals for termination to be paid in six instalments over several months. However, there were also claims that some former Casai employees had threatened to sue the company due to the first instalment amounting to 40 – 50 per cent of what they say they are owed, although were warned against it by lawyers as the startup could disappear “in a few months”. In the weeks after the layoffs, Casai completed a  merger with São Paulo-based residential apartment company Nomah. As agreed under the merger, the combined company, led by Barawid, would operate around 3,000 housing units in Brazil and Mexico, reaching up to 200,000 guests in the process. Casai had also sought an extension to its Series A round last year but it failed to materialise until venture syndicate Weclickd invested an undisclosed amount in the startup in June 2022. Despite this, in January this year, Bloomberg Línea reported that Casai was closing down in Brazil and would stop paying its network of landlords and suppliers, instead focusing solely on operations in Mexico. In his LinkedIn post, Barawid attributed the company’s difficulties to not investing in “better financial infrastructure and tooling at the outset”, not investing “in our people team more”, not acting as if “we had raised $10 million less and we were never getting another cent of investor capital again”, and not asking “for help sooner”. At an operating level, the CEO admitted that Casai was on track to be full-company profitable in January / February this year with around 25 per cent margins and “sky-high recurrence rates”, albeit prior to the closure in Brazil. While the global pandemic had “temporarily” dropped the startup’s average occupancy rates from 90 per cent to 30 per cent however, Barawid said that “the cold truth was we were up against an investment drought with a model no longer favoured by VC investors to produce venture returns”.