Digital Lock Startup Latch Raises $70 Million Behind Push From Homebuilder

The Wall Street Journal

Doors are opening for makers of keyless locks.

Companies that manufacture smart locks—which can be opened with a cellphone app or code and sometimes include cameras and intercoms—are battling to edge out traditional locks. Growth is being pushed by online retailers, delivery companies and real-estate firms seeking to make residences more easily accessible for maintenance staff, package carriers and tenants.

In the latest sign of interest in the sector, Latchable Inc., which sells Latch digital lock systems for multiunit buildings, has raised $70 million as part of a fundraising round that values the company at more than $250 million, according to a person familiar with the deal. Much of the investment came from Brookfield Ventures, a unit of Toronto-based real-estate firm Brookfield Asset Management Inc. BAM -2.52%

As part of the deal, Latch will have its products installed in Brookfield’s multifamily properties, said Latch CEO Luke Schoenfelder. Latch raised $26.1 million in previous rounds of funding at a $50 million valuation, according to PitchBook Data Inc. Several early investors were also real-estate companies.

Much of the growth in the digital-lock sector has been fueled by online retailers and apartment owners seeking to lower the cost of delivering packages or offer an amenity to tenants.

Last fall, Amazon.com Inc. started offering a connected door-lock and security-camera system to let package carriers and guests into homes via an app called Amazon Key. The $249.99 system, for now, allows only Amazon delivery workers to drop packages inside customers’ homes. This spring Amazon said it would join with General Motors Co. and Volvo to enable in-car product deliveries.

Latch last year joined with Walmart Inc. to start installing its smart locks in 1,000 New York City buildings. Shipper UPS also is piloting Latch’s service to give delivery workers access to apartment-building lobbies.

Smart-lock makers say the devices cuts package carriers’ costs. In some densely populated urban areas where packages can’t safely be left outside homes, carriers such as FedEx and UPS aren’t able to deliver about 30% of packages during the first attempt, according to executives familiar with the delivery data.

For real-estate companies, smart locks boost properties’ appeal and help reduce the time and effort required to change locks and keys when tenants turnover, said Ben Brown, executive vice president at Brookfield Property Group.

Brookfield, which owns around 66,000 multifamily units and builds on average 5,000 single family units annually, recently installed Latch’s smart locks in two buildings in Greenpoint Landing, a new residential project along the East River in Brooklyn.

For homes, digital security systems are driving smart-lock sales, but barriers remain, such as the added cost and difficulty of creating a system that is compatible with the wide range of locks on homes.

Latch doesn’t make locks for individual homes, instead focusing on convincing online retailers and building operators that a digital lock system will trim costs versus a traditional lock over the long term, Mr. Schoenfelder said.

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