Tech-enabled vacation rental management company Vacasa has closed a Series B round worth $103.5 million, with CEO Eric Breon saying that the focus now to scale up inventory in the US and internationally.

The Series B round, which Vacasa says is “the largest funding round in the industry to date” follows on from its $40 million Series A which closed last November.

CEO Eric Breon told tnooz that Vacasa has been working on developing its proprietary platform which serves the day-to-day management of guests on-site and maintenance of the properties, as well as the distribution.

Platform number

He said:

“The platform, we think, gives us a competitive advantage, in that it allows us to make sure that the operational side of the business is able to function across the 6000 properties we manage in hundreds of markets. We also get business analytics so we can keep improving these processes.

“We’ve also build a sophisticated yield management system which is all about monetisation – making more money for the owners we work with through our own channels and through third parties.”

This system has been built during its bootstrapping and Series A phase, and is, Breon said, scalable and ready for the planned influx of inventory coming as a part of the Series B.

“Everything we have is now scalable – we put a lot of work into this as we grew the business to where we are now and now there is a structure in place to handle the next phase of growth.”

Direct versus indirect

Vacasa sells direct to the consumer via its vacasa.com site, and also has distribution partnerships in place with brands such as Airbnb and HomeAway. Breon said that 40% of sales are made via its own site with the balance through third parties. Most owners are “neutral” when it comes to how Vacasa sells their property – “they just want someone to take the booking and manage the let,” he adds.

Breon repeated that a customer acquisition strategy is less important than building up the inventory, for many reasons. He noted that Vacasa.com has grown “without us investing much in marketing” and has built a loyal customer base in specific markets. Vacasa needs “a density of inventory around urban centres from where we can build up referrals and word of mouth.”

And the growth and ultimate success of the business is very much around getting inventory.

“The main constraint on the business is, by far, inventory not consumers. We’re very good at bookings, but even if we were to get that absolutely perfect we would only be, say 20% better because there are only so many days in the year people can travel, only so much you can charge per night.

“But on the supply side we can grow 100X, there’s so much inventory out there. That is how the business will grow in the next few years, bringing more bookable properties onto our platform.”

Acquistion versus organic

Vacasa has reached 6000 properties through a mix of organic growth and acquisition. It has bought some 60 small businesses to grow its reach in specific destinations, and with $100 million in the bank it is in a strong position to buy access to more inventory. Breon said that it is interested “in good companies with good properties because that gives us operational efficiencies from Day One. But if there isn’t a good fit, or the owners of something we like the look of do not want to sell, it’s worth remembering that we have grown organically in new markets – two employees, zero houses and taken it from there.”

Having proudly bootstrapped from its launch in 2009 to its Series A last year, today’s sizable Series B puts Vacasa into a different financial ball park. Breon however is confident that the lessons learnt from seven years of bootstrapping are still relevant when the warchest is much bigger.

“Our focus on what the property owner wants from their management company and what the guest is willing to pay will not change with the investment,” he insisted.

One area where the backing will help immediately is in growing the team, particularly on the tech side of the business. “We’re set up in such a way that the engineers, analysts and data scientists work closely together. We’re looking to double the number of people in this area from the 80 or so we have already, within the next twelve months.”

Breon noted that during the bootstrapping phase the business grew at a rate which was slightly out of it synch with its personnel budget, admitting that “we were cheap when it came to hiring.” But with the investment in place, “the scale of the opportunity justifies us hiring the best talent for any given function”.

And again, he referenced the scalability of its platform as the springboard for all its plans. “Now that we have the scalable infrastructure in place, it just makes so much sense for us to move really quickly and use that scalability to grow across markets.

The Series B round was led by Riverwood Capital with existing investors – Level Equity and Assurant Growth Investing – involved. Another new investor, NewSpring also contributed.