How Nationwide’s £2m Start-up Investment Became Lifeline For Thousands Affected By Poverty Premium
A £2 million investment in start-ups by Nationwide Building Society has been built into a lifeline for people experiencing financial exclusion.
The Society’s Incubator programme was kickstarted in 2021 to help level the playing field for people struggling with the ‘poverty premium’ – a wealth disparity where the lowest paid people in society end up paying higher costs for services and access to basic finance.
Nationwide invested £1.8 million into the Fair By Design (FBD) Fund, a venture fund managed by Ascension Ventures – providing capital to help grow businesses that make markets fairer by addressing the poverty premium. The fund, which was used to drive innovative solutions from a range of start-ups, was bolstered by a further £225,000 Nationwide directly invested in the start-ups – bringing the total investment to just over £2 million.
- Tembo: Tembo accounts for an estimated £35 million of savings following Nationwide’s investment. It allows first-time buyers to increase their deposit by borrowing against the value of family and friends’ property and incomes. The approach has already helped over 2,500 renters onto the housing ladder, who expect to save £14,000 on average in interest charges on their mortgages over the next five years. Some 70 per cent of Tembo’s first-time buyers wouldn’t have been able to buy a house without their help.
- Plend: Plend lends to people unable to access traditional financial services due to inaccurate or invisible credit history, often leaving them to take out products and services with unfavourable terms. Plend is able to offer larger and more affordable credit by examining transaction data in order to understand a customer’s real financial picture. Plend has so far saved its customers over £366,000 in unfair interest charges and fees.
- Kettel Homes: Kettel Homes helps renters buy their own homes with a minimum deposit of just two per cent. The service initially purchases a property the customer wishes to live in and then rents it back to them at an affordable rate. This gives renters more time to save their deposit, build their credit score, and improve their affordability. After three years, people are the able to purchase the property at the original price it was bought. The first two properties have already been purchased with a further two in the pipeline.
As well as investing in the start-ups, Nationwide has also provided financial backing and expert support from across the building society and partner charities in order to help bring ideas to life. A new report from the University of Bristol concluded that the start-ups “hugely valued” their new connections with Nationwide and the charities, and gained “significant knowledge, expertise and contacts” from the programme.
Louise Prior, Head of Propositions at Nationwide Building Society, said: “Since we founded the Nationwide Incubator in 2021, it’s only become more pressing to find new ways to support people who have been frozen out of the financial system due to their circumstances. Through these start-ups we have been able to help thousands of people make huge savings, access finance and move into homes. We look forward to the future success of our Incubator start-up cohort.
“Investing for social good has long been seen as being in conflict with investing to make a return. We see these figures, as well as the independent report from the University of Bristol, as confirming that the approach of our Incubator means that these two goals can both be achieved without sacrificing either.”
Robert Pasco, Co-founder and CEO at Plend, said: “The Nationwide Incubator has been fundamental to Plend and our growth to date. We first entered the programme in 2021 with no customers, no regulation, no team and a very basic product prototype. The support we have received from Nationwide and their advisors – including data, guidance, referrals and investment – has assisted Plend in supporting thousands of customers with low-cost credit. It has also supported the launch of our first ‘Green Home Improvement Loan’, which helps homeowners finance affordable solar and heat pump installations to alleviate the skyrocketing costs of energy that UK consumers are facing today.”
Richard Dana, Co-founder and CEO of Tembo, said: “It has been an amazing opportunity working with Nationwide to further develop our proposition to help customers find a route to homeownership. Creating solutions to solve the ongoing housing crisis requires collaboration from a wide range of different stakeholders. Combining our technology, agility and innovation with Nationwide’s insights, brand and sector expertise has enabled us to start delivering on our mission to make home happen for everyone.”
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