The report — which cites unnamed insider sources, including one Frontdesk employee — says the company now plans to file for a state receivership, in which a court appoints a third party to manage a company’s assets in order to repay lenders. The layoffs came after Frontdesk failed to raise additional capital. Frontdesk co-founder and CEO Jesse DePinto notified all employees Tuesday afternoon during a brief virtual meeting, according to TechCrunch. DePinto did not respond to BizTimes’ request for comment Friday.
Founded in 2017, Frontdesk gained notoriety as one of the fastest growing companies in the country, ranking on the Inc. 5000 list in 2021 and 2022. The tech-enabled startup leases apartments in upscale neighborhoods and then sublets them to guests – with a focus on short-term business and personal travelers – and provides onsite management of its properties.
In June, Frontdesk acquired Chicago-based Zencity a competing short-term rental operator. An SEC filing just days later indicated the company had raised another $4.8 million, adding to the $22 million in equity financing it had raised since its founding.
Frontdesk has grown its operations to 35 U.S. markets, including Austin, Charlotte, Chicago, Indianapolis, New Orleans, Minneapolis and Phoenix. In Milwaukee, its rental units are largely clustered in the Historic Third Ward, Walker’s Point and East Side neighborhoods.
A phone number listed on the company’s website currently connects to a recording saying Frontdesk is unavailable and advises customers with reservations to seek “alternative accommodations and expect to be contacted within the next two weeks.”
Frontdesk is not the only company in the short-term rental market to encounter financial troubles, the TechCrunch report points out naming Stay Alfred, Domio, Lyric, Zeus Living, The Guild and WanderJaunt. In fact, Frontdesk last year acquired 33 units in three different West Coast markets that had been managed by the now-shuttered San Francisco-based WanderJaunt. TechCrunch noted that Frontdesk acquired a total of more than 100 units across several cities also from WanderJaunt and other competitors Stay Alfred, Lyric and Domio.