Exclusive: Property expense management startup raises $5.2M

Topkey, an expense management startup for property managers, raised $5.2 million in seed funding led by Felicis Ventures.

Why it matters: Expense management startups like Brex and Ramp have attracted billions in funding by betting they can battle American Express — newer entrants are differentiating by honing in on specific industries.

Details: Nashville-based Topkey focuses on property managers, with its customers primarily being those handling short-term, Airbnb-like rentals.

• These property managers handle everything for owners, from maintenance to restocking abodes with toilet paper, resulting in heavy paperwork, lost time, and human error, says CEO Jonathan Sukhia.
• Managers are also usually managing properties for multiple owners at any given time.
• Additional investors include a16z, Y Combinator, Andrew Kitchell, Assurant Ventures, Liquid 2 Ventures, Grit Partners, and Kindergarten Ventures.

How it works: Topkey seeks to address the issue by offering credit cards that automatically lodge expenses and makes it easier to tag who — guest or property owner — ultimately owes which expense.

• Topkey syncs those flows with the property manager's accounting software, and also offers bill pay services.

What they're saying: "Anecdotally, talking to a lot of [property managers], anywhere between 10 and 20% of those expenses just don't get allocated back and they're eating the cost," says Sukhia.

How it makes money: Topkey currently makes the majority of its revenue from subscriptions, but also earns some from interchange.

Of note: Sukhia was most recently the head of global management company partnerships for the hotels group at Airbnb.

What we're watching: Topkey sees the ability to be a financial center for a wider group of property managers in the long term.

• The company offers checking accounts via Thread Bank. It's also working to offer a high-yield trust account in coming weeks.
• Some of its customers already use Topkey's software to manage properties outside of short-term rentals, taking care of parking lots and pools for Homeowners Associations. The company is also building an offering for companies that manage hotels.

State of play: "Verticalized" players say they can more address issues specific to a complex industry — leading to a sticker user base.

• Nitra, an expense management startup focused on physicians, raised $16 million in funding last year from investors including Andreessen Horowitz, New Enterprise Associates, and Pantera Capital.
• Coast early last year raised $27.5 million to focus on fleets.