Our Investment in Habito: Why using technology for mortgages is a better deal for both borrowers and lenders
At Atomico, we’re on a mission to look for the most ambitious founders, the people who want to build the next leader in their category or the company that changes a fundamental component of our economy and society. The founders who want to use technology to rewire the world in favour of something better for as many people as possible.
One area we know well that is both a universal pain point, rite of passage for most consumers during their lifetime and has remained largely untouched by the software revolution is retail mortgages for homeowners.
Taking out a mortgage is the single biggest financial transaction most consumers will make in their lifetimes.
So it’s not surprising that people seek advice in making the right decision.
Last year 68% of homeowner mortgages were sold through brokers in the UK. Yet going to a broker remains a slow, manual, opaque and often expensive process costing up to £500. Most importantly it’s ineffective, and results in borrowers missing out on thousands of pounds saving per year. To put that in perspective, according to HSBC the total overspend on mortgages in the UK alone is estimated to be £29bn annually.
We have been tracking innovation in the mortgage space for several years and, as many of you may know, we invested in the Lendinvest team back in March 2016. They have built a marketplace to connect investors with property entrepreneurs and developers needing bridging, development and buy-to-let financing with over £1B of loan origination volume to date.
We are now excited to announce we are partnering with Habito in a different segment of the mortgage market; addressing the pain-point for homeowners of finding the right mortgage the first time and making sure they remain on the best mortgage for them for the rest of their lives.
Even if the market changes around them in the meantime.
Habito have built an entirely free digital solution that analyzes over 20,000 mortgage products, across 70 lenders, in real-time. They provide automated advice through a chatbot to reduce the time spent on an application with a traditional broker by over 50%.
Their solution will also improve things for lenders. By providing access to specific customer groups and with risk assessment already completed, lenders will benefit from both lower customer acquisition costs and lower operational costs with fewer people needed to assess the risk. When we see a solution that is better for both sides of the market, to us that feels like a winning formula.
Team is always the most important part of any investment, and we are delighted to be backing Daniel Hegarty and his team. Daniel has been a friend of Atomico for many years, initially working with our Partner Niall Wass at Wonga. There he was Head of Decision Science, where he helped build the credit decisioning & risk engine behind one of the first new fintech challengers brands to emerge from the UK.
We know from personal experience that Daniel has the data and product mindset, driven by a strong mission to lead the much-needed disruption in the mortgage space.
We are delighted to announce today that we have led Habito’s £18.5m Series B with co-investment from our friends at Mosaic and Ribbit.
Atomico Partner will be joining Habito’s board and our Growth Acceleration team — Europe’s most experienced group of Operational Partners — will be deployed to help Daniel and his team build a global category leading business.
Our Partner and Head of Talent, , will work with Habito to continue to build out a world-class management team that already includes Martijn Van Der Heijden, ex- global head of mortgages at HSBC and Jenny Watts, former director of lending operations at Metro Bank. Last, but certainly not least, our Partner and Head of Growth, Benjamin Grol , will bring his expertise from scaling products such as Facebook, Messenger, Google Maps and Gmail to work with the team on user growth and retention.