Proportunity raises £2M from Anthemis and Axel Springer Digital Ventures, for real estate lending platform helping first-time-buyers

London-based fintech company Proportunity has raised a £2M seed investment to drive its analytics and lending platform that offers home equity loans to first-time buyers. The startup is the only “Help to Buy” challenger to date that has actually helped consumers own homes.

Since becoming FCA authorised in 2018, Proportunity has grown to over 5000 users and lent on properties worth over £10M. Besides scaling its consumer base, this latest funding will help the startup grow its network of partnerships with real estate agencies and mortgage brokers.

The funding comes from Anthemis, the fintech investment fund behind eToro and Betterment, alongside Axel Springer Digital Ventures, an early stage investment unit of Europe’s leading digital publisher Axel Springer.

The start-up removes the biggest barrier to homeownership – large down payments – by providing equity loans similar to the government’s Help to Buy scheme. Raising the deposit a buyer can put down increases the range of mortgages they can apply for and reduces their long-term interest costs.

Proportunity will typically lend 15 percent of a property’s value meaning a buyer with a 5 percent deposit can secure the 20 percent needed for most mortgage providers, helping buyers afford homes worth up to £150,000 more than they would on their own.

While the loans provided by Proportunity are open to all prospective home-buyers, the company is targeting first-time buyers who need extra support to get on the housing ladder.

On top of providing an equity loan, Proportunity can also help people identify good value properties in up-and-coming area through its predictive AI technology and analytics platform which act as a digital buying agent.

The platform creates smart forecasts on the housing market by crunching millions of data points covering everything from crime and school ratings to broadband speeds and pollution. The aim is to help buyers find houses with the highest level of capital growth.

Proportunity will be using the funds from Anthemis and Axel Springer Digital Ventures to rapidly scale its business in the UK and pilot its expansion into Europe. Anthemis is a leading global fintech investor, who have previously invested in SME banking provider Tide, online wealth management platform Betterment, and international payment system Currencycloud. Axel Springer Digital Ventures is a 100% subsidiary of Axel Springer, the media and technology company with brands like BUSINESS INSIDER, BILD, WELT, StepStone and AVIV Group, who holds Axel Springer’s minority participations in companies such as the hybrid real estate agent platform Purplebricks.

Proportunity’s expansion comes as the dream of home-buying seems increasingly out of reach for many people and with the government’s Help to Buy scheme due to end in 2023.

Santander’s 2019 first-time buyer study found that 70% of would-be first-time buyers believe the dream of homeownership is already over for many young people. The same study found that the average price of a house bought by a first time buyer has increased 47% in the last 10 years, while wages have only increased 18%, making it harder for young people to get onto the housing ladder.

The UK government introduced Help to Buy, a state-funded programming lending equity to first-time buyers, which has lent more than £12 billion, in 2013. However, the scheme only supports new-build houses and has faced criticism for driving up profits of house-builders like Persimmon, who tripled their profit on each house sold under the scheme.

Founded in 2016, Proportunity is an Entrepreneur First alumni and former Google Machine Learning Incubator resident. Co-founders Vadim Toader, formerly of Bain & Company, and Stefan Boronea, formerly of Booking.com, teamed up after they experienced the challenges facing first-time buyers, with a lack of experience in making real-estate decisions, and the pains of saving up the cash deposit.

Proportunity employees are also their own customers – half their team has bought homes thanks to the Proportunity Loan.

Vadim Toader, founder and CEO of Proportunity, said: “Home ownership has become a major social divide between those who have benefited from capital growth and those who have not. Our aim is to help open the door of home ownership that has been slammed in the face of a whole generation. Many young families are forced into long commutes or poor quality rentals when they could have the certainty and security of ownership.

“By broadening equity loans to all housing stock and by using AI to offer insights to select the perfect investment, we want to have a positive social impact that also supports both estate agents and traditional mortgage lenders.

“With the Government’s Help to Buy scheme destined to end in a few years, and further second steppers restrictions starting 2021, the UK housing market is in dire need of a private sector alternative that’s tried, tested and ready to help the next generation of homeowners.”

Ruth Foxe Blader, managing director at Anthemis, said: “Getting on the housing ladder is a critical consideration for the majority of people and that’s why we’re thrilled to support Proportunity. We believe equity loans can be part of the solution to accelerate homeownership among those who earn enough to afford a mortgage but may not have enough savings for a deposit.

“Equally, there’s an excellent opportunity to use AI and analytics to assist buyers and better inform the market. Proportunity’s analytics platform plays a crucial role in supporting investments and in bringing a greater level of transparency to a market that can often be confusing and daunting to first-time buyers.”

Jan Graefe, Principal at Axel Springer Digital Ventures, said:

“There’s a whole generation of potential buyers unable to get a foothold on the housing ladder despite earning enough to cover a mortgage. As we’ve seen in other areas of search and estate agency, there’s a real opportunity for digital innovations to fix market failures and complement existing players, just as Proportunity works alongside with estate agents and mortgage lenders.”