Hybrid Hospitality Meets Crowdfunding

25.08.2023 - 14:25 / skift.com / Matthew Parsons

Outsite, a membership-based hospitality company that focuses on remote workers, has raised $1 million through an alternative method: crowdfunding.

The Santa Cruz-headquartered startup turned to Wefunder to raise the cash, giving investors a slice of equity in the company from $500. Their investment will convert into equity in a future of round of funding, usually led by an institutional investor, or when there is an exit. The venture exposes about 2.5 percent of Outsite’s $40 million value.

It reached its $1 million goal after launching just a week ago, but CEO Emmanuel Guisset described the decision as a “roll of the dice.”

That’s because investor appetite has waned since the beginning of the year, with many travel companies in particular delaying or pulling out of plans to go public. The buzz around special purpose acquisition companies has subsided too.

Outsite’s fundraising efforts also come as global markets face up to the possibility of recession. To make matters worse, many of Outsite’s guests operate in the crypto world, which has been rocked by the collapse of cryptocurrency exchange FTX.

However, 60 percent of Outsite’s members said they wanted an opportunity to invest, based on a poll it carried out recently. So Guisset took a leap of faith.

“We could have raised $1 million if we’d done it in early 2022, before the crisis,” he said. “Now people are watching their money a bit more, and a lot of people lost money in crypto. We were a bit scared of that. But it shows there’s appetite to invest in brands and products.”

The success could be a precursor to a major 2023 trend: brands that have been courting remote workers could be rewarded next year as travel restrictions further ease, particularly across Asia.

Flatio, another hybrid hospitality company, has seen year-on-year revenue growth of 48 percent, its strongest financial year since it was founded in 2015 — the same year as Outsite.

The monthly housing platform for digital nomads company credits the $1.24 million in revenue to the boom in remote work and the growth of digital nomadism post-pandemic. It also recorded a “generated rental value” — a measurement of how much money the company collects from tenants for its landlords — of $5.4 million

Overall, short-term rentals are generating more revenue than before the pandemic, according to Skift Research.

But the crowdfunding model also encapsulates the hybrid hospitality’s ethos: guests want more than a space to sleep and work, they want to feel part of a community.

In one sense, Outsite has pulled off a marketing coup.

“It’s a way to make our members more a part of our company, and become ambassadors, because if you invest you’re more likely to stay and spread the word,” Guisset said.