In October 2016, Vivian Hernandez, 59, experienced a stroke that forced her into early retirement. She's the main breadwinner for her household that includes her elderly mother and two grown children. Wanting to earn extra income by utilizing her property in Oakland, California, she turned to Villa, a new venture-backed startup that provides ADUs, or accessory dwelling units.
What Villa offers is not a tiny home or the average granny flat, but a separate unit that's linked to a homeowner's main dwelling, which sits on their lot. Hernandez chose an 800-square-foot ADU, which came with two bedrooms and two full bathrooms for $269,000. She rented the backyard unit for about a year to earn income and is now preparing to move her elderly mother into the ADU.
"This is a person whose foundation was rattled when we met them," said James Connolly, co-founder, and CEO of Villa. "In a few months, we've effectively doubled the amount of square footage on her property."
Villa has emerged from stealth with $15 million in funding from Atomic, the San Francisco and Miami-based venture studio and fund. In just 16 months, Villa says it has become the country's largest and fastest-growing ADU provider with a run rate of $100 million in annualized bookings, or an estimate of future revenue from already signed contracts.
Villa says it has hundreds of ADUs in production, whereas some of its competitors might only have a few dozen.
"From what we have seen, the data suggest that we're somewhere around 10 times their size," said Jack Abraham, founder and managing partner of Atomic. Like most of the startups he's involved in at Atomic, Abraham will also take a cofounder title at Villa.
Villa's beginnings correlate with California easing its regulations around ADU construction. The state's legislature first started to ease rules around ADU construction in 2017, which has made it easier for homeowners to add these tiny backyard homes.
The easing of restrictions also made it easier for ADU startups to emerge, and with that came eager investors willing to back them.
One existing competitor in the already crowded venture-backed ADU space is San Francisco-based startup Cottage, which raised $3.5 million in seed funding last November, led by Susa Ventures and Base10. In July, another hot ADU startup, Abodu, raised $20 million from investors including Norwest Venture Partners, Initialized Capital and Redfin CEO Glenn Kelman.
Currently operating in 106 cities in California, Villa says it will facilitate the entire ADU process, from design to delivery. And it will take care of additional details like obtaining permits and helping customers get financing.
While many of the other ADU startups also offer prefabricated units that are move-in ready, Villa says it has been able to distinguish itself from competitors by building a software platform that allows customers to customize each ADU.
Customers can choose from 10 floor plans ranging from a 450-square foot, one-bedroom unit that will cost $199,000 to a spacious 1,200 square foot three-bedroom unit for $309,000. Abraham says most of Villa's customers opt for the larger units in the 800 to 1,200 square-foot range.
By comparison, Abodu only offers three floor plans, with its largest ADU being a 610 square foot unit with a $259,900 price tag.
Another part of Villa's sales pitch is that they will guarantee a price for the entire project from beginning to end, or offer customers their money back. "I'm not aware of any other builder in the entire industry that does that," said Connolly.
