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Proportunity, the startup that provides “help to buy”-style equity loans primarily for first-time property buyers, has raised £2 million in additional funding.

Billed as a seed round, backing comes from Anthemis, the fintech investor, and Axel Springer Digital Ventures, the early-stage venture arm of European digital publisher Axel Springer. The startup and Entrepreneur First alumni had previously raised £1.7 million in equity and a credit line of debt financing.

Previous investors 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.

Founded in 2016 by Vadim Toader and Stefan Boronea, Proportunity wants to help first-time buyers purchase a home that is more suited to their needs than a mortgage alone might afford.

It does this by providing an equity loan of up to 15% of a property’s value to enable the home buyer to effectively put down a bigger deposit and therefore secure a more competitive mortgage. This, claims the startup, also enables the home buyer to potentially purchase a larger or better-located property, and reduce the amount of interest charged by the mortgage lender in the long term.

The way it works, therefore, 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 within five years, you have to repay the Proportunity equity loan at 15% of the current market price.

Therefore, if the price of the house has gone up, the amount you pay back also will have increased. In the event that the price has gone down, the startup loses money.

All of this is backed by Proportunity’s machine learning-based forecasting technology, which claims to be able to identify good-value properties in up-and-coming areas. The idea is that better use of data — from crime and school ratings to broadband speeds and pollution — can help reduce the risk of equity-based property loans both for the lender and borrower.

With regards to how many homes Proportunity has helped finance, the startup isn’t breaking out the exact numbers. However, co-founder Vadim Toader tells me it is “more than 20 and less than 100.”

He also says that two of the top five high-street lenders in the U.K. have lent alongside Proportunity on multiple homes, proving that the model can be made to work (a year ago it wasn’t clear how the market would respond to Proportunity’s equity loan offer). The company is currently working with 12 mortgage brokers in total.

“We’ve made partnerships with real estate agencies, and their mortgage broker arms, so they can refer the first-time buyers that come to them directly,” says Toader.

Meanwhile, I asked Toader to run through what assumptions have proven true so far or haven’t panned out.

He says that the team thought it would prove to be a complicated proposition to explain to customers, but actually they tend to get it quickly due to awareness of the U.K. government’s Help To Buy scheme.

He also thought Proportunity could help speed up the home-buying process, but a few parts, such as conveyancing, can still take a few months.

And despite Proportunity’s data play, “people do get emotionally attached to properties. Data helps them detach a bit, but not that much.”

Read more: https://techcrunch.com/2019/10/17/proportunity-raises-2m-seed/