Proptech neolender Proportunity raises $150M mixed debt and equity round

You’ve heard of neobanks. Meet the neolender. One of the newest is London-based Proportunity. It’s now raised a $150 million mixed debt and equity funding round ($7 million equity financing and $143 million in debt), on top of its $10 million debt round in 2020.

The round was led by VentureFriends, Kibo Ventures and existing investors Anthemis, Entrepreneur First as well as new U.K. proptech investors Amro Partners. The startup plans to use this funding to grow its team, as well as increase its maximum loan size from £90,000 up to £150,000 per home.

Some 85% of renters in the U.K. want to own their own home, but can’t because of high deposit requirements and rapidly rising house prices.

Proportunity says it provides home buyers with a home purchase equity loan, similar to the U.K. government’s “Help to Buy” scheme but available for any home not just new builds. It allows them 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 they get from a mainstream lender. The equity loan, in addition to the mortgage of up to 4.5x income, means they can effectively borrow up to six times their income.

The company says it can do this through its machine learning that helps identify fair-valued homes in high potential growth areas, de-risking lending and removing the need for a large deposit.

Vadim Toader, CEO and co-founder said:

In the U.K. there is a £100,000-200,000 gap between what buyers want and what they can afford, mainly caused by lenders restricting what they will lend to a maximum of 4.5x income and high deposit requirements. Combine this with growing house prices and the need for an extra bedroom in the new “work from home” environment and it’s easy to see that buyers are facing a losing battle.

VentureFriends partner, George Dimopoulos said: “In Proportunity we saw a product that can positively impact the lives of thousands of FHBs.”

Proportunity has a couple of main competitors: Generation Home — a new spin on guarantor mortgages, which largely helps structure financial help from family/friends. Wayhome (aka Unmortgage) offers a private version of shared ownership that combines renting with a mortgage deposit.