Lavanda is a UK-based property management software company founded in 2014. Lavanda’s next-generation platform optimises the performance of institutional apartment portfolios by powering short, medium and long-term rental strategies from a single, unified enterprise software solution. The company counts many of the world’s leading real estate companies as its clients, including Blackstone, Greystar, Starwood and Hines amongst many others.

We’re excited to be sitting down CEO Frederik Lerche-Lerchenborg to shine a spotlight on Lavanda’s journey so far and share his advice for aspiring founders and management teams.

Share the story Lavanda, how did it come to fruition?

Surprisingly, Lavanda began as a laundry app — which is quite a long way from where we are today! We started out as a B2C laundry app allowing consumers to schedule an on-demand laundry service and connecting them with service providers, but we quickly found that the majority of demand for our service came from business users. We hadn’t expected this at all, so we worked closely with these business customers to find out why they were using us.

It turned out that these customers were largely real estate operators and property managers of various types, all trying to profit from soaring demand for hospitality-led short and medium term rentals. This was before what we now call “flex living” was a thing. Moreover, these companies didn’t have any of the tools they really needed to actually scale their short-term rental business as they intended, and deliver on its potential. Existing residential property management platforms had completely overlooked short and medium-term renting, so these companies were all stringing together a number of apps to solve different problem areas within their business, none of which spoke to one another. In parallel with this, short term rentals were facing increasing regulation, with London one of the first cities to champion a new regulatory framework.

We saw an opportunity to build a software product that addressed these core pain points head on, enabling apartment buildings to profit from short-term rentals in a way that was fully transparent and compliant, better aligning all the various stakeholders. So we set about speaking to as many institutional landlords as we could to test whether there was appetite for our solution, and the answer that came back was a resounding yes.

AirBnB had opened up a market, and there was very clearly growing demand on the supply side from high quality, institutionally-owned, professionally-operated inventory. Whilst Airbnb had led the way on the demand side, it had also paved the way for hundreds of other booking channels including Booking.com, Expedia and many others. I would argue, however, that even today it is a broken ecosystem. A lot of short to medium term rentals are performed illegally by tenants subletting in breach of their tenancy agreement and infringing local regulations — not because they want or intend to break the rules, but because there simply isn’t the right toolkit available for them to embrace it in a compliant manner

So ultimately we decided to pivot the business and build out a technology solution that addressed this issue for institutional real estate globally. Since the pandemic, both consumer and corporate demand for flexible renting has grown exponentially, meaning our platform and toolkit is of increasing strategic importance to operators as it allows them to keep pace with the evolving nature of rental demand.

What has been the hardest lesson learned so far?

One of the hardest lessons learned so far is just how hard, and how expensive it can be to evolve beyond your first pilot product. Most people can pull together an initial “string and sticky tape” app — there are so many tools available to help you fake it until you make it. However, there is a great deal of work and infrastructure needed to scale with large, enterprise B2B partners. There were so many additional things to figure out and, as the number of people in the business grows, progress takes a lot more time and investment than you may initially fathom. In many ways, I think it’s a good thing that entrepreneurs learn this lesson a bit further down the line. As founders, you have to be a little crazy to go on this journey in the first place, but if it was clear from the outset just how hard the growth phase is then even fewer people would bother starting up tech companies!

Another difficult lesson is that different skill sets are needed for different stages of the business. One of our cliched mottos at Lavanda is “the only constant is change”.

We are internally resistant for anyone to feel that change is a bad thing. Change should be embraced! If you’re not constantly adapting and evolving in your first 20 years as a company, you’re probably doing something wrong.

Navigating these changes and keeping your team motivated and inspired along the way is hard, but it’s essential.

What has been the biggest surprise during your time at Lavanda?

I really thought a majority of my time and effort would be spent overseeing the tech side of the business, as our IP was optically our primary asset as a company. We’ve found, however, that our company culture is by far the most valuable part of our business. Consequently that is where I focus a lot of my time and energy. If you invest in your people, giving them the autonomy and the flexibility they need, you’ll be endlessly surprised by their work.

We were operating short and medium term rentals throughout the pandemic and, frankly, our business should never have survived this period! It was truly the commitment and the tenacity of our team that kept the business alive. I feel constantly energised knowing that we’re on this exciting journey with this team.

I would argue that in many respects your team is as important as your market fit.

What advice would you offer other growth companies about financing their business?

Worry less on the price and dilution and focus on signing vanilla, clean structured deals. You need to ensure the deal is structured as cleanly as possible as soon as you take one penny from investors.

Any strange, complex terms are very unattractive to future investors and can become a barrier to investing. I would caution founders to be suspicious of anyone trying to do something funky with prefs in the background as it may trip you up in the future.

Secondly, raise more than you think you need because things will always take longer and cost more than you anticipate.

Thirdly, consider multiple forms of capital. Equity isn’t the only option — there are a lot of other ways to finance your businesses. There’s venture debt with the likes of yourselves at Atempo Growth for example.

Finally, never wait until the end of your runway to figure out what your options and next steps are. The more proactive you can be the better. Make sure you have all eventualities planned out and costed, and that you have enough fuel in the tank to execute on plan A, B or C as may be necessary.

What is Lavanda’s biggest achievement so far?

Our biggest achievement so far is simply winning the right to work with our biggest customers.

Our customers are some of the biggest global real estate players in the world. We took the journey step by step, and have worked with many smaller real estate companies along the way, and when we began winning these top-tier global enterprise deals, it felt like a coming of age as a business.

This shift has enabled us to focus more on servicing our existing customers and build more sustainable and predictable growth patterns. This was the mission we set out on, and it’s been an honour and privilege to get to this point.

Any further tips for aspiring founders?

For those thinking about starting a company: just go for it. The perceived opportunity cost holds back so many people. I meet so many people with great ideas. Ideas are cheap. Every great company that has ever existed is probably built on an idea that has been had by more than one person, but there’s a difference between thinking about it and actually doing it.

A lot of people who start companies are high achievers, and it can be daunting to step off a career treadmill for the fear of missing out on the next promotion or the next step. In reality, if you do leave the comfort of an existing role and start your own business you may lose some time, some money, and potentially a specific promotion, but you will gain invaluable experience you wouldn’t find elsewhere. 9 times out of 10, you will be able to return to the career you had if your business doesn’t work. I think this career-led pressure to stick with what you know increases the perception that starting your own business is a massive jump, and this can be off-putting — it doesn’t matter if you’re talking about a large B2B company, or starting a restaurant, or a side hustle. My advice would be to take the step and try. The potential loss is actually dramatically less once you do it. I only wish I had made the move to entrepreneurship 5–10 years earlier than I did.

For those who have already started and are figuring it out: experiment quickly, and move on from the ideas that don’t work even more quickly. We’re all guilty of spending too long holding onto things hoping they would improve, but if you assess KPIs from the beginning, early on in the first weeks, you will know in your heart what areas aren’t working.

Focusing on the right thing once you find it is so important. Find what is generating the best KPIs and pour your energy into it. This will get you to a moment of comfort where you may be able to raise or bring other people in on your journey. All second or third time founders will have this in their DNA, but it usually takes a few years to learn.

Visit the Lavanda website to find out more.