All posts in “Startups”

Proportunity offers ‘help to buy’ loans based on predicting future house prices

Proportunity, a London-based startup and Entrepreneur First alumni, wants to help first time buyers get on the property ladder earlier or purchase a home more to their liking.

The company, which recently became an FCA authorised mortgage lender, claims to use machine learning to accurately forecast future house prices and the areas of London that will see the highest growth in the next few years. Based on confidence in this modelling, it will soon begin offering equity loans to boost your deposit when buying a first home.

Specifically, once Proportunity has used its technology to help identify a property for sale that both fits your needs and offers good house price growth prospects, the startup will offer an equity loan of up to 15 percent of the property’s price. You then combine this loan with the money you have already saved for a deposit so that you can apply for a mortgage with a lower loan-to-value ratio, which in turn will command a lower interest rate.

The way it works is quite similar to the U.K. government’s “Help To Buy” scheme, except it isn’t restricted to a new build and you have to pay monthly interest on the loan from the get-go. Like Help To Buy, when you sell the house or remortgage it in five years time, you have to repay the Proportunity equity loan at 15 percent of the current market price. Therefore, if the price of the house has gone up, the amount you pay back will have also increased. In the unlikelihood that the price has gone down, the startup loses money.

Overall, however, since a Proportunity loan is interest-only until you pay it back, the company says the combined monthly repayments are less than if you took out a 95 percent mortgage to buy the same home. And unlike shared ownership schemes, you don’t have to pay rent on the 15 percent of your home funded by a Proportunity loan.

More broadly Proportunity is attempting to solve a very London-centric problem: house prices are so high and continue to rise that by the time you save up for a 20 percent deposit to secure a mortgage you can afford, property prices in the area you want to buy will have increased enough to put it out of reach again. Or you’ll be left buying a smaller property.

“One of the biggest societal challenges we face is getting the next generation onto the housing ladder,” explains CEO Vadim Toader, who founded Proportunity with CTO Stefan Boronea. “The biggest reason this is hard is that it’s increasingly difficult to save up for a deposit, even for buyers with qualifying salaries. But what if we could use technology to give people a leg up onto the housing ladder? It all starts with forecasting”.

To put its machine-learning house price forecasting to the test, in July last year Proportunity worked with Post Office Money to help first time buyers identify the best areas to buy, not just in terms of affordability but also in terms of future growth. “This was insightful, as we learned that there are 200,000 fewer first time buyers per year than there used to be, and 70 percent cite deposits as their biggest issue. If we can help these people find deposits, we can reverse the tide”.

That, of course, is where the U.K. government’s own scheme is meant to kick in. However, Help To Buy can only support around 40,000 first time buyers, says Toader, partly because it has a limited budget and partly because it only addresses new properties.

“The interesting thing is that many of those left out have two great characteristics,” he says. “First they have a good income and excellent prospects, and secondly they want to buy in an area where we project property prices will grow significantly. The simple issue is they can not afford a 20 percent deposit. We believe our technology can help”.

To that end, Proportunity has secured £5 million in credit to begin making equity loans. The startup itself — which is part of EF cohort 7 — has raised £2.7 million in funding to bring its equity loans to market and further develop its price forecasting technology.

Backers include Global Founders Capital, Concrete VC (backed by Starwood Capital Group), Savills, EF, Trusted Insights, and Le Studio VC, along with angel investors Matt Robinson (Nested), Chris Mairs (EF) , Charlie Songhurst, Nicolas Berggruen, and Julian Critchlow.

Lastly, I’m told that half of the Proportunity team, including Toader himself, is taking out a Proportunity loan. “We’re going through the process ourselves, sitting in the customer’s shoes to better understand it and fix it before releasing it to them. [I] guess it also shows we’re eating our own dog food”.

Furniture startups skip the showroom and go straight to your door

Startups making delivery and transport easier than ever are a hit with venture capitalists, so it’s not a surprise that young tech companies delivering home staples — living room sets, dining room tables, couches and more — are raising big dollars.

From 2010 through 2017, venture investors have outfitted U.S.-based furniture startups with a little over $1.1 billion in funding across 96 known rounds. But that funding has not been spread equally over time, as the following chart shows:

Total dollars funneled into U.S.-based furniture startups, according to Crunchbase, hit an all-time high of $432.7 million across 12 rounds in 2011. Wayfair, an e-commerce site dedicated to selling furniture, raised a significant $165 million Series A that year, accounting for more than a third of the total deal volume.

But while funding hasn’t surpassed 2011 levels, from that year through 2015, round counts steadily climbed. During this period, investments into seed and early-stage startups made up more than 70 percent of known deals.

Whether or not this cohort of seed and early-stage startups will act as fodder for late-stage investors is not yet clear. Before that happens, Stephen Kuhl thinks that there’s more work to be done.

Kuhl, the CEO of Burrow, a company that sells furniture over the internet, told Crunchbase News that “selling traditional furniture made in China or Mexico isn’t innovative, and as such we wouldn’t expect to see a lot of venture funding.” But that doesn’t mean that venture interest in the sector is doomed. Kuhl added that “a new company has to offer a unique product, experience and brand that is altogether [10 times] better than traditional offerings. Expect the money to follow the new brands that truly shake up the status quo.”

That may bear out. The funding data we examined tells one particular story: venture money has shown a preference for delivery and a consumer that doesn’t easily call the place they live in “home.”

Deliver, don’t move, furniture

For city dwellers, modular, utilitarian couches are taking hold. And it’s increasingly clear you don’t have to leave your couch to purchase one.

Let’s return to Burrow, which has raised a total of $19.2 million, according to Crunchbase. The startup has created a modular couch built for those who live in dense urban environments and may move often.

“Our customers are reflective of larger trends in the market. They’re more likely to be renters rather than homeowners,” Kuhl explained. “They’re likely to move multiple times over the course of a few years, and they crave thoughtful, high-quality goods.”

To account for this new type of customer, Burrow delivers each section of the couch in distinct packages. Burrow claims on its website that its direct to consumer business model and its ability to ship parts of couches, rather than one whole couch, removes “over 70 [percent] of standard shipping costs.” The couch also includes modern amenities such as a USB charger, and Burrow has also “launched an AR app that helps customers visualize a Burrow in their home,” according to Kuhl.

However, Burrow isn’t completely eschewing the showroom as part of its selling strategy. In a podcast interview with TotalRetail, Kuhl noted that the startup has “partner showrooms” in co-working spaces and other retail locations in more than 20 cities.

Of course, while modular design is helpful for city dwellers, there are those who enjoy a bit more of a personal twist. Interior Define, a Chicago-based startup, has raised $27.2 million to offer direct to consumer couches and dining room sets. And, according to Interior Define’s founder Rob Royer, its appeal is being driven by a new breed of consumers who are interested in brands that have “an authentic mission, deliver on a promised experience, and offer a real value proposition (not just a lower price).”

That said, both of these options still require that the furniture be owned — an unnecessary burden if you move often or just like fresh looks without the commitment. Through Feather, customers can subscribe to a whole living room, bedroom or dining room for as low as $35 a month. According to Crunchbase, the New York-based startup has raised $3.5 million from established venture firms such as Y Combinator and Kleiner Perkins.

There are also startups looking to simply help brands sell more furniture by using artificial intelligence and augmented reality. One such startup, Grokstyle, has raised $2.5 million for an app that identifies furniture by image as well as style and pricing preferences.

In general, streets, kitchens and even front doors are being claimed by venture-backed startups. What you sit on might as well be paid for, in part, by venture capitalists, too.

Chowly is raising $5.8 million to help restaurants manage on-demand delivery orders

Chowly, a point-of-sale system for restaurants, has raised nearly $4.7 million, according to an SEC filing. The company is targeting a total raise of $5.8 million.

Chowly aims to help restaurants better manage the influx of delivery orders they receive from a variety of services, such as Grubhub, Delivery.com and Chownow.

In May, Square launched a point-of-sale system for restaurants that integrates on-demand delivery platform Caviar. Down the road, Square said it envisions third-party applications from companies like Postmates, UberEats and DoorDash.

Chowly had previously raised just $700,000 from MATH Venture Partners, Domenick Montanile and others. I’ve reached out to Chowly and will update this story if I hear back.

Chad Rigetti to talk quantum computing at Disrupt SF

Even for the long-standing giants of the tech industry, quantum computing is one of the most complicated subjects to tackle. So how does a five-year old startup compete?

Chad Rigetti, the namesake founder of Rigetti Computing, will join us at Disrupt SF 2018 to help us break it all down.

Rigetti’s approach to quantum computing is two-fold: on one front, the company is working on the design and fabrication of its own quantum chips; on the other, the company is opening up access to its early quantum computers for researchers and developers by way of its cloud computing platform, Forest.

Rigetti Computing has raised nearly $70 million to date according to Crunchbase, with investment from some of the biggest names around. Meanwhile, labs around the country are already using Forest to explore the possibilities ahead.

What’s the current state of quantum computing? How do we separate hype from reality? Which fields might quantum computing impact first — and how can those interested in quantum technology make an impact? We’ll talk all this and more at Disrupt SF 2018.

Tickets are available here.

Emptor looks to help companies more easily find contractors in the area

For any company looking to spin up some kind of operation in a new region, one of the first steps may be finding contractors in the area that can actually get the work started — but, especially as companies drift further from cities, that can increasingly become a nightmare that’s quite familiar to Matt Velker.

That led to he and his co-founder starting Emptor, a network to connect companies with local contractors in order to get those local projects off the ground effectively. That can range from actual construction to janitorial work or landscaping. A platform like Emptor seeks to take a lot of the ambiguity or guesswork out of finding a set of local companies to work with in order to get construction projects off the ground. It also adds a robust audit trail — ratings or otherwise — to ensure that the best contractors surface up and that everyone knows which ones they should skip.

“Every time you’re building [projects in new regions] you have to find an entirely new set of suppliers,” Velker said. “Often in rural areas when there isn’t an saturation of contractors like there is in a large metro, that discovery process within a reasonable time frame was the biggest challenge. Especially within the construction industry, there’s a huge deviation in terms of the quality fo the companies you work with. We definitely had a lot of pains with unreliable contractors who weren’t getting the job done to spec or on time, or things that came close to fraud. It comes with the territory when you work with that volume of companies in a short period of time.”

Companies first go to Emptor and describe the projects they want and what kinds of pricing structure they are offering. Then, kind of like Thumbtack or other marketplaces, Emptor matches those projects up with qualified contractors and then compares those bids in order to select the best offer. It aims to be a replacement for the time spent searching around Yelp or Google, where there may be listings and pages but not a high volume of ratings — or ones that are even accurate to begin. Even after the search, getting the whole process started can take weeks, another period Emptor hopes to shrink by streamlining that process.

Right now Emptor mainly focuses on facilities and maintenance, though should something like this take off it could add other elements of contract work that companies need. The approach also aims to be more granular, giving companies more ways to identify the needs of the project that might not necessarily just be quantitative. After all, better data about a company’s actual needs that flows into some algorithm can produce better matching, and that can also go down to the actual way compensation would work on that project.

“Having just one number for what a project will cost is convenient from the supplier and buyer perspective, but it’s missing out on the ability to build structured data that you can analyze,” Velker said. “The companies are deciding, ‘what do I need to know, how many years have you done in business.’ You want to be explicit about how are we going to make this decision. If price is a factor, how much of a factor is it, so they can spec things out and there’s transparency to the buyers.”

But while it’s an attempt to try to bridge that gap between the company and a service provider, it’s one that many companies have tried to fill before. There are tools like Angie’s List and others for finding contractors, though Velker says those are primarily geared toward consumers — and some end up bending the apps in order to fill the needs they have for contractors without some kind of formal platform to use. Velker acknowledges the theory behind all these tools is pretty similar, though he hopes Emptor will be able to tackle the specific needs companies might have that he’s experienced himself.