need of More affordable housing has never been more urgent as the US housing market remains deficient.
Startups abound trying to help address the shortfall in various ways. One such startup aboduhas raised $20 million in a Series A funding round led by Norwest Venture Partners. Redfin CEO Glenn Kellman, former Stockton, California mayor Michael Tubbs, GGV investor Hans Tung and Paradox Capital’s Kyle Tibbits, along with previous backer Initialized Capital, also participated in the financing.
The California legislature changed the laws in 2017 to make it easier to build ancillary housing units (ADUs). Then on January 1, 2020, the state of California made it dramatically easier to add additional housing units to single-family home sites. Cities and local agencies must quickly approve or reject ADU projects within 60 days of receipt of permit applications. The state now prohibits cities from enforcing minimum lot size requirements, maximum ADU dimensions or off-street parking requirements.
Redwood City, Calif.-based Aboodu, which makes prefabricated edu, was founded in 2018 as a “one-stop shop” for building edu, or as some describe it, a house in the backyard.
What sets the company apart from others in the space is its execution claim that not only does it manufacture and install units, it helps homeowners with the painstaking process of obtaining permits. abodu says it pre-approves its structural engineering with California state-level agencies to ensure its units can be built statewide and works with local agencies to pre-approved its foundation system to ensure that projects proceed on schedule.
It also claims to offer a cheaper and faster process than making ADUs from start to finish. Notably, the startup claims that one of its backyard homes can be installed in just 10% of the time it takes to build a traditional ADU.
Abodu has been active in the market to sell and manufacture its ADUs since the fall of 2019. Since then, it has grounded “dozens and dozens” of units, and on top of that it has several dozen units in production. CEO & Co-Founder John Gerry. As of now, it is operating in the Bay Area, Los Angeles and Seattle. The company claims that it can deliver ADUs in as little as 30 days to San Jose and Los Angeles thanks to the cities’ pre-approval process. In other cities in California and Washington, the turnaround is “as short as 12 weeks”. but According to Geary, a standard bespoke project takes 4-5 months from start to finish.
The startup’s three products include a 340-square-foot studio; A 500 sq ft one bedroom, one bath and a 610 sq ft two bedroom unit. All have kitchen and living space.
Pricing starts at $190,000, but the average project cost across all sizes is about $230,000, Geary said, including permits and site work.
There are a variety of use cases for ADUs, the most popular of which are for home, family and rental income.
“During the pandemic, multi-generational living has been at an all-time high. There are serious family needs that people are trying to solve,” Gerry said. “In addition, people are making extra money by hiring community members such as teachers or firemen, single individuals or small couples.”
Next, Abodu is eyeing the San Diego market.
Earlier this week, we covered the recent growth of Mighty Buildings, another Bay Area-based startup building ADU, and other housing. According to Geary, the biggest difference between the two companies is that Mighty Buildings focuses on innovation in construction with its 3D-printed method.
“We decided early on that we didn’t want to reinvent the wheel from a construction standpoint,” Geary said. “Instead, we looked at ‘How can we solve for speed and ease?’ “
Abodu operates on an asset-light model, and has no factories. Instead, it has created a network of factory “partners” throughout the western US that build their units based on what their capacity looks like at any given time.
Naturally, the company’s investors are excited about the company’s business model.
Jeff Crowe, managing partner at Norwest Venture Partners, believes Abodu’s “beautifully designed units” are one of the company’s selling points.
“John, Eric and their team manage the end-to-end process of permitting, manufacturing and installing on behalf of their clients,” he told ClearTips. “And with expedited permissions granted to Abodu in over two dozen cities, it has a faster installation time than other ABODU market participants. The result has been high levels of customer satisfaction and rapid growth.”
Former Stockton mayor Tubbs said Abodu is dealingg California’s two most important issues: the statewide housing shortage and its effects on racial and economic segregation in our neighborhoods.
“By making it fast and accessible for ordinary homeowners to build high-quality backyard housing units, Abodu’s success will mean integrating options for both renters and homeowners in the same neighborhood, while also integrating options for small homeowners and Property owners need to be supported in building equity in their homes.” He wrote via email.
Tubbs described the speed that Abodu can deliver to housing units to customers in parts of California as “astonishing.”
“Abodu’s team has done some of the toughest legwork for property owners by building local contractor relationships with trusted, verified, high-quality partners,” he said. “As a homeowner, I know the challenges of permitting and finding contractors during construction. Attention to detail and customer trust is what sets Abodu apart from other similar offerings.”