Why We Invested: StepLadder

The aspiration of owning your own home is a common dream the world over. However, due to a range of macroeconomic variables, it has become increasingly difficult to purchase your first property, especially in cities such as London. While over three-quarters of millennials in the UK do not want to rent for the rest of their lives, almost a third fear they will never own a home. Whether they decide to rent or buy, millennials are spending a greater proportion of their income on housing than previous generations.

The reality is, beyond the macro reality of ever-rising house prices in many large cities, the habit of saving is at the core of this problem space. Saving money is hard. There are many technology companies tackling the savings aspect of personal money management. Some do from a passive perspective, typically deploying a rounding-up style product that allows customers to save without having to think about it. Others apply behavioural change principles to their products to nudge their customers into better savings habits.

At Anthemis, we believe that these approaches are insufficient. Savings need to be tangible. What am I saving for and how long will it take to reach my goal? Saving for saving’s sake is not enough to stay engaged and incentivised.

The homeownership market is not an area with which Anthemis is unfamiliar. We have backed the founding teams at Proportunity and Wayhome in the UK and Maxwell in the US.

While a number of our portfolio companies are solving a variety of problems throughout the home buying journey, there is still room for more innovative approaches to support people at the beginning of their homeownership journeys. The existing property landscape maintains the need for a deposit before anything else can be done and, while the average required UK deposit (c. £30,000) seems like a princely sum, try saving in London where the average necessary deposit is now more than £80,000.

The other aspect we believe is key to building a successful savings habit is collaboration. Money, by and large, is a taboo subject in the UK. We rarely talk about how much we earn, what investment tools we use, or our top tips for saving. However, our behaviours have become increasingly collaborative in all other aspects of our lives. We share our lives a lot more openly online than even 10 years ago. What if we could take the best bits of these sharing habits and make money management more collaborative?

A shared incentive and a common goal are fundamental to how successful saving products can achieve real scale.

We have spent a number of months exploring both the homeownership space and the collaboration space as these relate to financial goals. When we started working with the team at StepLadder to understand how they were using collaboration to deal with homeownership deposits, it was pretty obvious that their solution was quite innovative. The rotating savings and credit association (ROSCA) model is a powerful tool that has been popular in many emerging markets for generations. (Just check the variety of names for this model on its Wikipedia page.) Leveraging ROSCA can help people build savings behaviours not only for home-buying down payments, but also for other savings objectives. Coupling ROSCA with a social and community-based angle to enable people to talk about money is a really powerful one-two punch at the problem of savings for deposits towards homeownership.

Investing in StepLadder through the BBVA & Anthemis Venture Creation Partnership means that the company can leverage BBVA’s presence in multiple markets where the ROSCA model is prevalent, opening up the potential for StepLadder to bring its model to many countries with support from a world-class financial institution.

Matthew, Lucy and Mihir, the founders of StepLadder, are all passionate about the problems they are working on and the bigger picture of financial wellness, homeownership and how we talk about money. We could not be more excited about how the partnership between StepLadder and the BBVA & Anthemis Venture Creation Partnership is going to help make the world of savings and homeownership a more collaborative and better place.

Special thanks to my colleague Archie Cochrane for his help on this post.