Announcing Lightspeed’s Investment in United Dwelling, an Accessory Dwelling Unit Company Founded by Steven Dietz.
Who can forget the “Rent Is Too Damn High” memes of the 2010s? What started as a political party became part of pop culture through SNL and TMZ when the straightforward message struck a national chord.
Unfortunately, the affordable housing crisis has only gotten worse since then:
- A renter working 40 hours a week and earning minimum wage can afford a two-bedroom apartment in zero counties nationwide.
- Nearly half of renters are spending 30%+ of their income on rent.
- Rent prices have outpaced wage growth by 26x over the last 20 years.
The root of this crisis boils down to three reasons:
- Housing policy has favored homeowners over renters, making density difficult.
- Affordable housing suffers from a national “not in my backyard” problem.
- Rising costs of land, labor and materials makes affordable housing expensive to build.
California responded to the first two of these challenges in October 2019, passing AB 68, effectively ending single-family zoning and allowing multiple units to be built on a single property. ADUs (accessory dwelling units), also known as granny flats, are small structures that are built on the property of existing homeowners. They’re typically around or under 1,000 square feet. They help increase housing density on private properties which allows for more nimble home building.
This is why you’ve seen a number of ADU startups emerge over the last few months. But making zoning easier for ADUs is not enough. When inertia makes the status quo the easiest path, a homeowner willing to build an ADU still needs to learn about the opportunity, then figure out how to permit, plan, build and finance a whole new building, then manage a tenant. That’s a lot of friction.
We’re excited to announce our investment in United Dwelling, who are taking all of this friction out of the process to tackle the affordable housing crisis. They are turning garages like this…
…into homes like this:
United Dwelling partners with homeowners to build a rental unit in their backyard with no upfront cash outlay. It’s an end-to-end solution that allows homeowners to increase their property value and renters to live closer to work at affordable prices. United Dwelling takes care of all steps of the process from permitting to planning to construction and financing to property management (including finding a tenant). They’ve developed technology around identifying the right opportunities for ADUs and have engineered their ADU construction process to make sense for scaled adoption.
I have known the founder, Steven Dietz for many years. Steven cofounded Upfront Venture Partners and we sat on the board of Zest.AI together. He’s thoughtful, very very smart, an expert in fintech and lending, and well regarded at city and state government levels having advocated for the policy changes that led to AB 68. He’s the right guy for this opportunity and has pulled together a talented team. Lightspeed is proud to be part of a new wave of affordable housing.
Thanks to Mercedes Bent for her help in drafting and editing this post.