neo-lender Proportunity has raised £105m ($150m) investment through debt and equity funding as it aims to support more people achieve their UK home ownership dream. The new investment follows a £7.3m ($10m) funding round in 2020 for the London-based fintech.
This latest debt and equity round was led by VentureFriends, Kibo Ventures and existing investors Anthemis, Entrepreneur First, and new UK proptech investors Amro Partners. The new investment will enable Proportunity to grow its team and will go towards helping more than 2,000 individuals and families to buy their first home or progress up the property ladder. The funding will also increase Proportunity's maximum loan size from £90,000 up to £150,000 per home, further boosting affordability for buyers and helping them secure the home of their choice.
Lending since 2018, Proportunity provides home purchase equity loans to support first home buyers (FHBs) in getting a foothold on the booming UK property market. The company also helps ‘second steppers’ secure a new home to accommodate changing circumstances, such as a growing family in a market where consumers struggle with affordability amid rising property prices.
Proportunity loans are similar to those available through the UK Government’s Help to Buy scheme but are available for all homes, not just new builds. They enable buyers to afford homes with only a 5% deposit, reducing the amount they need in savings. The Proportunity equity loan of up to £150,000 or 25% of the house price sits on top of the maximum mortgage that can be secured from a mainstream lender, enabling a buyer to borrow up to six times their income level. This additional financial leverage closes the significant gap between what many UK borrowers can secure from a mortgage and the cost of a home they wish to purchase.
Research* shows that 85% of renters in the UK want to own their own home, but are unable to do so due to high deposit requirements and rapidly rising prices which are squeezing affordability for those trying to get on the housing ladder. In 2020, 65% of first-home buyers (FHBs) cited deposits and affordability as the main roadblocks. There are limited solutions available: banks, deterred from low-deposit lending by regulations and capital requirements, will typically lend up to a maximum of 4.5 times income and demand large deposits to mitigate house price risk. Help to Buy provides a solution for those purchasing new-build properties, but only serves 10% of FHBs and is set to end in April 2023.
Proportunity also utilises machine learning technology that helps identify fair valued homes in high potential growth areas, de-risking lending and removing the need for a large deposit. Properties that have been selected via this innovative technology have registered returns that are 50% better per year than the UK house price index (HPI).
Vadim Toader, Proportunity CEO and co-founder said: “We’re delighted with the success of this latest investment round which will enable us to help thousands of people in the UK own their first home or progress up the property ladder.
“In the UK there is a £100-200K gap between what buyers want and what they can afford, mainly caused by maximum income/mortgage ratio restrictions and high deposit requirements. In a market of fast-rising house prices, first-time buyers and those wishing to progress on the property ladder are facing a losing battle. Proportunity provides a solution which closes the gap and helps buyers afford the property they want in the communities where they want to live.”
VentureFriends partner, George Dimopoulossaid: “We’ve been investing in proptech startups that improve the real estate journey since 2016. In Proportunity we saw a product that can positively impact the lives of thousands of FHBs. Proportunity founders, Vadim and Stefan, have experienced the pain of trying to get on the housing ladder themselves and we were impressed with their resilience, drive and progress so far. “Proportunity directly addresses the pain of FHBs, it makes housing more affordable and more attainable while also sharing the house price risk, instead of putting the risk solely on the FHB and/or their family.”
Javier Torremocha from Kibo Ventures said: “We were greatly impressed by the vision and execution capabilities of the team led by Vadim and Stefan. Proportunity is in the very attractive intersection between proptech and fintech, and contributes to generating positive impact in people by allowing first-time home buyers access to their dream homes. Kibo Ventures has been an early backer of unicorns like payments company Flywire (Nasdaq $FLYW), workforce-as-a-service JobandTalent or micro-mobility Tier. We believe Proportunity has the potential to join this exclusive club. Kibo Ventures invests at an early stage in consumer and enterprise software, supporting European companies with their international expansion.”
Anthemis Group Partner, Ruth Foxe Blader, said: “Anthemis is thrilled to continue supporting Proportunity in its journey to help first-time buyers get great homes. Despite the challenges of Covid lockdowns and market uncertainties, this outstanding team has continued its growth journey on multiple fronts. We’re excited for the next chapter!”
