Housing Savings Startup StepLadder Raises £1.5M

A London-based startup named StepLadder, aimed at helping the millennial generation afford a down payment for a house in the U.K., has raised £1.5 million in seed funding.

TechCrunch is reporting that BBVA from Spain, VC Anthemis and Seedcamp contributed, along with some unknown angel investors.

The company said it is going to use the funding to help grow its “collaborative finance program,” and potentially expand beyond the U.K.

StepLadder was started in 2015 by Matthew Addison, and later Mihir Bhushan and Lucy Mullins joined. The company works with a financial program called the “Rotating Credit and Savings Association” (ROSCA), where it puts members into “circles” where everyone puts in the same amount of money every month, and one gets randomly selected to win the “pot,” which they could then use toward a home down payment.

However, there are safety measures in place to ensure that even after a person wins the pot they still pay. The monthly payment ranges from between £25 to £1,000.

“For most first-time buyers, it’s really difficult to get on the property ladder,” Addison said. “Home ownership rates amongst 25-34 years olds have collapsed… [with around] 250,000 fewer first time buyers every year, for over a decade, in the U.K. alone. Raising the deposit is the biggest hurdle. At StepLadder we’re using something called a ROSCA, a form of collaborative finance where people work together in groups to help our members raise their property deposits, on average, 45 percent faster.”

A person who’s making payments at £500 a month would do it for 20 months to raise £10,000 with 19 other people in the circle.

“Each month the £10,000 is randomly allocated and you could be drawn at any point in that 20 months,” said StepLadder’s Lucy Mullins. “You have to keep making your £500 a month payment for the full 20 months, so at the end everybody has paid in £10,000 and everybody has received £10,000.”