Obligo Raises Big Funding for Deposit-Free Rentals App, Providing an Enticing Solution for Renters

By Thomas Price Wednesday, November 25, 2020

Within the past year, renting an apartment or buying a house has been a far more difficult pill to swallow financially. As the economic downturn caused by the COVID-19 pandemic continues to affect millions of people, the real estate market has shrunk in 2020. In places like Manhattan, this year has seen record vacancies even as rent prices continue to drop. So, for many people moving to a new apartment, the need to save money has perhaps never been higher. This is where a startup like Obligo comes in. Considering many of the expensive upfront costs when renting or signing a new lease, Obligo helps ease this initial financial burden. So, what is Obligo, and what can be expected from the company in the near future?

What Is Obligo?

Obligo is a fintech company focused mainly on real estate, and especially apartment renting. The company was founded in 2018 and has since begun to consistently grow to the point where it has partnered with a series of high profile property and real estate firms, including Stuytown, Stonehenge, Duke Properties, and HFZ Capital Group. The basic premise of what Obligo aims to do is to enable renters to sign leases and move into apartments or homes without having to pay an initial security deposit. Instead of paying a security deposit upfront or buying deposit insurance — which can often be as much or more than a full month’s rent — the renters will instead submit a payment method for pre-authorization. If, by the end of the lease, the landlord does, in fact, want to charge from the security deposit for a designated cost, Obligo will cover the initial charge. From there, the app user will be able to pay Obligo back either all at once or over time through a series of installments. Even for those who have already paid their security deposit, Obligo will help that deposit be released back to the user and then replaced with an Obligo Billing Authorization in its place.

Obligo essentially relieves the financial burden both at the beginning and end of a lease. The renter will never have to fork out the entire security deposit at once, nor will they be required to pay whatever may be taken from it all at once. There will never be a large overwhelming payment that is due for the user, ensuring no severe financial windfall. However, Obligo takes on a serious bit of risk by covering any initial payment requests from the landlord if the renter is unable to pay.

Applicants approved to use Obligo must connect their bank account to the platform, at which point the company’s artificial intelligence (AI) underwriting engine will enact a financial screening to determine whether the applicant is approved or not.

The concept for Obligo is sound, but to initially get off the ground, the company would need enough money to foot hundreds if not thousands of possible security deposit charges within a year. Additionally, the payback process for many users will take significantly more time following the initial charge that Obligo pays.

Obligo’s Funding Round

After a long process, Obligo finally did get the initial boost of finance it needed after closing their Series A funding round, where they raised $15.5 million. This will allow the company to roll out their technology across the United States in a time where a service like this could make a serious difference to many different people. The investment in its Series A round was led by 83North, 10D, Entrée Capital, Viola Credit, and various other real estate-minded investors. This should represent a major step in deposit-free renting, especially considering how vitally important and relevant it appears to be in 2020.

Final Conclusions

During the COVID-19 pandemic, more apartments in major cities are going empty, hurting the cities, renters, and landlords. One of the largest issues for renters is how many upfront costs exist in a time when saving every dollar makes a difference. Obligo’s deposit-free solution to the issue has never been more timely, and the recent funding will help make the use of this app happen on a large scale across the nation.

About the Author


Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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