London-based fintech and proptech startup Proportunity has raised a €2.3 million seed investment to drive its analytics and lending platform that offers home equity loans to first-time buyers.
Since becoming FCA authorised in 2018, Proportunity has grown to over 5,000 users and lent on properties worth over €11.6 million. 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.
Founded in 2016, the startup removes the biggest barrier to home ownership – 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 typically lends 15% of a property’s value – meaning that a buyer with a 5% deposit can secure the 20% needed for most mortgage providers – helping buyers afford homes worth up to €173k 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 equity loans, Proportunity can also help people identify good value properties in up-and-coming areas 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’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.
“Home ownership has become a major social divide between those who have benefited from capital growth and those who have not,” said Vadim Toader, founder and CEO of Proportunity. “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.”
The UK government introduced Help to Buy, a state-funded programming lending equity to first-time buyers, which has lent more than €13.8 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.
Proportunity employees are also their own customers – half their team has bought homes thanks to the Proportunity Loan.
“There’s a whole generation of potential buyers unable to get a foothold on the housing ladder despite earning enough to cover a mortgage,” said Jan Graefe, principal at Axel Springer Digital Ventures. “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.”