Fronted lands seed investment from Monzo-backer Passion Capital
Fronted, the London-based fintech hoping to finance the UK’s renters, has landed seed funding from Passion Capital – the backer of UK challengers Monzo and Tide.
First reported by TechCrunch, the investment showed up in a recent regulatory filing for the company.
What we know about the deal
Whilst the size of the investment was not disclosed, the filing did reveal that Passion Capital partner Eileen Burbidge is joining Fronted’s board.
Burbidge had a heavy hand in Passion Capital’s early backing of Monzo. Fronted co-founder, Simon Vans-Colina, was an early employee of Monzo, perhaps pointing in part to why the VC invested.
“Like a lot of businesses, we have been finding our feet in post-pandemic world,” fellow Fronted co-founder and former Bud employee, Jamie Campbell, tells TechCrunch.
What is Fronted?
The UK start-up is still working on a series of offerings, having founded the venture last year. It is also currently on the Financial Conduct Authority’s (FCA) regulatory sandbox. Former Apple employee Anthony Mann is the third co-founder.
Campbell tweeted on 27 August that the fintech was launching “soon” but didn’t give an exact date. According to TechCrunch, it will be later this year, pending regulatory approval.
In essence, Fronted wants to help renters finance their rental deposits. Its credit product – still in the making – is designed to finance deposits directly.
The start-up is confident it can lend more cheaply at a lesser risk compared to players already tapping the rental market.
Renters can pay back the loan over a set schedule, or in one go once they have the money. The fintech has also planned a ‘holiday mode’ to help borrowers temporarily reduce payments to avoid financial hardship.
A bad time to launch in the rental market?
Coronavirus caused a drastic 57% fall in demand for rental housing in the second two weeks of March.
In April, this fall rebounded 30%, according to Hometrack, a company which helps businesses identify residential property risk.
It estimates that there were 1.2 million moves over 2019 in the UK lettings market, but that 2020 will see a 25% fall from this figure.
This makes it a tough year to be launching a rental finance service. But as Hometrack points out, the market started rebounding as early as April.
And as employers begin to reintroduce workers to offices, renters living at family properties to save during the pandemic will start moving back into the cities.
According to the latest Office for National Statistics (ONS), the median monthly rent in England is £700. London has the highest median monthly rent at £1,425 – suggesting where Fronted will focus the majority of its efforts.
For Inner London, the highest median monthly rent is currently in Westminster at £2,492. The difference between the highest monthly rent in London and the lowest outside London is nearly £2,100.
This just shows the versatile collection of loans Fronted will need to offer as it scales across the UK.