UK fintech Fronted raises £1m with backing from Monzo co-founders
Fronted, a start-up aiming to help renters afford deposits up front, has raised £1 million in debt and equity.
Amongst its investors are Monzo co-founders Paul Rippon and Gary Dolman. Rippon is now chairing yet-to-launch UK challenger GBB, whilst Dolman is a venture partner at Singapore-based VC Antler.
“I know as a landlord and former tenant that deposits can be difficult to pull together,” says Rippon. “That real problem needs solving.”
Dolman, who calls Fronted’s proposition “highly differentiated” in the current market, will join the start-up’s board as part of the investment.
Alongside Rippon and Dolman, British Labour peer Baroness Kingsmill also joined the latest funding round, as well as Finnish angel investor Ville Vesterinen, and Grip co-founder Ling Lin.
In all, around 20 investors joined the round. Jamie Campbell, one of the start-up’s three co-founders – which also include early Monzo employee Simon Vans-Colina and former Apple employee Anthony Mann – says Fronted will use the cash to grow its deposit loan business.
Campbell adds that his team also wants “to create greater access to Fronted” by “partnering with platforms that will offer Fronted as a deposit payment option”.
The new capital injection brings the start-up’s total funding to date to £2 million.
Fronted’s latest investment follows an undisclosed seed funding round led by Passion Capital in August 2020 – the backer of UK challengers Monzo and Tide. This also saw Passion Capital’s partner Eileen Burbidge join Fronted’s board.
Taking on insurance-based models
The UK start-up was founded in 2019 and completed the Financial Conduct Authority’s (FCA) regulatory sandbox last year.
In essence, Fronted helps renters finance their rental deposits. Its credit product 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 with insurance-based offerings.
It says that unlike its competitors, renters can pay their original deposit over 12 months.
“We believe the insurance model doesn’t protect tenants and is prone to miss-selling,” says Campbell.
“It is also expensive. For customers bridging between deposits and moving multiple times the fees stack up.”
The start-up estimates renters pay on average £2,000 in insurance fees before they buy their first house. That’s based on an average moving rate of five times before they settle.
Fronted, which is an authorised consumer lending institution, went live in February 2021 and promises no hard credit checks
The fintech went live on Yobota’s core banking platform in February 2021 after delays from the originally planned October 2020 go-live date.
Yobota was founded alongside challenger bank Chetwood Financial in 2016. While Chetwood focuses on the banking side, Yobota – now registered as a separate entity – covers the technology.
Yobota deploys on Amazon Web Services (AWS) and cloud platform Heroku. Based on the Linux operating system and written in Python, Yobota claims that its platform can be stood up in “hours”.