Originally published on BusinessCloud, Jan 21st 2019, by Jonathan Symcox.
A former Silicon Valley entrepreneur has launched an innovative start-up that could help solve the UK’s ‘generation rent’ crisis.
It is no secret that spiralling house prices – and therefore deposits – are pricing many people out of the home ownership model. The number of 25-34-year-old property owners is now at a low of 37 per cent.
Enter StepLadder, the London FinTech which has fully launched its unique collaborative deposit-saving platform following a successful pilot last year.
“We’ve seen decades of rising house prices, but wages haven’t grown in line,” said founder and CEO Matthew Addison. “Many prospective first-time buyers have all but given up on the dream of home ownership StepLadder provides a quicker and simpler method to save up for a deposit. We are the friend of the first-time buyer.”
StepLadder claims to help first-time buyers raise deposits 87 per cent faster than saving alone. It groups members in ‘circles’ in which each individual contributes, through a peer-to-peer platform, an identical amount of money – ranging from £25 to £1,000 – each month. The contributions of each member of the circle in that particular month are then allocated to one of the circle’s members by random draw.
The process is repeated on a monthly basis until all of the circle’s members have received their deposit money. All members enter into a peer-to-peer loan agreement and borrow a percentage of funds, apart from last member to draw their funds.
Addison helped set up digital accessibility and assistive technology firm LevelAccess – one of the fastest-growing companies in the US – in 1997 while studying with friends at Stanford University. He says StepLadder, which is based upon a model offered by high street banks in Brazil which he studied for his post-graduate thesis, is another “mission-driven” business.
“I saw it had potential here in the UK – the seed was planted in my mind back in 2006,” he told BusinessCloud. “It now has the opportunity to germinate.
“We're getting the word out there and seeing an acceleration that's really exciting – we've added rocket fuel to the mix. We really feel the momentum building and are looking at multiples of growth in 2019.”
StepLadder has two live circles – one at £750 a month and another at £25 – and plans to make a further five live in the upcoming weeks including £250, £500 and £1,000. “We also have what we call ‘first-step’ circles, where people just get used to working in the StepLadder circle model,” Addison explained.
Addison, who has spent the bulk of his professional career since 2006 in finance at the likes of Goldman Sachs and as a partner at Cheyne Capital, says the UK’s nationwide regulatory regime makes it an “extremely attractive” market.
“In the US you have a state-by-state regulatory regime, which is one of the things that's tripped up some of the peer-to-peer lenders in the US versus in the UK,” he said.
“Under one regulator we can essentially roll out our platform to 65 million people. In our target demographic you're talking about three to four million.
Future markets could include Canada, Ireland and Australia/New Zealand, while StepLadder has seen interest from Scandinavian property developers keen to white-label its product.
The firm has raised £950,000 funding to date and employs 11 people on a full-time, contractor and hourly basis.
“The London FinTech scene is extremely active and energetic,” Addison continued. “Ten years ago the scene here was a faint shadow of the Bay Area (Silicon Valley) but now it's interchangeable, especially in FinTech, because you've got critical mass.
“That was the key to getting Silicon Valley's momentum up and also for the biotech quarter out in Boston: critical mass creates serendipity – and that's what we're now seeing in the UK.
“You have the right skillset and the right ideas bouncing off each other. As capital is recycled from successful exits, it essentially multiplies growth and results in proliferation.”
Michaela is the Head of Communications at StepLadder and is passionate about helping people be at their best!