Canadian Start-Up Aims to Deliver Flexible Payment Options for Renters
Chroma, a Canadian property management platform that manages rent through coordinated payment installments, is looking to help renters pay their rent each month.
“There is very little being done for tenant experience, especially in terms of flexible payment accommodations for renters,” Chroma’s co-founder and CEO Myles Shedden tells STOREYS. “We want to help landlords do a better job.”
Shedden previously worked in global operations at Skip the Dishes, where he assisted with the rollout of the delivery platform supporting Canadian, Australian, UK, Italian, and Irish businesses. Now he wants to take what he learned in managing stakeholders and provide relief for renters.
He believes renters are at a disadvantage because credit markets misprice the risk of renters, particularly when it comes to their rent. And he thinks credit checks are not a good predictor of someone’s financial reliability.
“Credit checks don’t capture one of the biggest expenses: rent. We just think people use them because they are so easy to use,” says Shedden, adding that Chroma’s flagship product, ChromaRent, does not perform any credit checks on prospects.
“Credit scores should count rent because those people are making those payments. Whether you are paying a loan or making a significant payment — rent is your biggest expense, it should count, and that’s what we’re building [with Chroma].”
To apply, renters need to provide their proof of income (bank statements), verify their lease details as well as their identification. After the assessment they speak directly with Shedden so that “he can understand the needs of each client from the start,” he says.
The service, which is accessible via a web application, costs renters $10 a month, $120 a year. Renters then work out an installment plan (currently it’s twice a month) to pay back Chroma. So, if rent is $1,000 a month, it is converted to a debt payment of $1,000 and then can be broken down into two installments of $500. Chroma fronts the full amount so there are no late payment fees, while also supporting those who could pose a risk to getting dinged for insufficient funds.
“You tell us the day you want to pay rent, and you tell us when you want to pay us back,” says Shedden. “Our platform offers e-transfer, pre-authorized debit, and soon credit. Renters choose how they would like to pay.”
Chroma, which was founded in late 2020, initially served as a payment platform solely for landlords. The platform now allows renters to build their credit in real-time so that tenants can have a clear reference of their past payments for the future. Chroma has an integration with Equifax, which is different from having to rely on references of past landlords to prove someone is reputable. Also, credit bureaus do not know each renter or landlord, so there is no easy way to manage risk, the company says.
“The biggest problem in the renting space is the lack of continuity — you have to start over every single time — and the best thing you can do is call up an old landlord, which no one really does anymore,” says Shedden. ‘We’re the only platform in Canada where a landlord can track e-transfers.”
Shedden says they have been “building quietly” and raised a pre-seed round from venture capital firms, including Toronto-based Alate Partners, Alberta’s Accelerate Partners, and the University of Calgary’s UCeed Social Impact Fund. Many backers are proptech venture capital funds that have a social impact arm, meaning they have a mandate for returns based on investment decision and on social impact.
“I think the most important thing is that housing is becoming unattainable for the average Canadian, prices have soared compared to wage and income growth, and an entire generation, particularly those under 40, are getting left behind,” says Shedden.
Chroma is planning to “100% go further into lending” in the future. Their upcoming product, ChromaDeposits, will pay the upfront damage deposit for renters, and then renters will pay Chroma back. It is expected to launch in March.
“Companies that issue credit make or break by their ability to price risk. We want to rebuild that trust through different criteria,” says Shedden.