Fintech/News/

Peter Thiel backs UK fintech Generation Home

Mithril Capital has made its first investment into a UK fintech, leading a $30m funding round into Generation Home.

By Sifted reporters

Peter Thiel’s investment firm Mithril Capital has made its first investment into a UK fintech, leading a $30m funding round into mortgage startup Generation Home.

Thiel joins other well-known investors in the round such as Monzo founder Tom Blomfield and alumni from Transferwise.

It’s part of a wider boom in investment in European fintech this year, with €10bn so far this year alone. This compares to €8.4bn in the whole of 2020, according to Dealroom

It also comes as Thiel, who cofounded Paypal and analytics firm Palantir, has been ramping up his investments into European tech in general and fintech in particular. 

For years Thiel was a sceptic about Europe. In 2018 he said there were “no successful tech companies in Europe”. Previously he had called the region a “slacker with low expectations”.

But like many other US investors,  he’s finally caught the European tech bug. Through his four investment firms Founders Fund, Valar Ventures, Mithril Capital Management and Thiel Capital as well as as an angel investor he has backed more than 40 European companies.

Some of his more notable investments include N26 Group, Trade Republic, Qonto, Bitpanda and Deposit Solutions.

Generation Home

Generation Home is a mortgage lender launched in October 2020 by husband and wife Will Rice and Sophia Guy-White. 

The company says it makes it easier for first-time buyers to purchase a home with support from family or friends than a traditional mortgage lender.

This is largely through its novel “fractional ownership” platform which allows parents or friends to build up a legal equity stake in a property they are helping to fund.

So for instance, Generation Home allows a parent to pledge their own annual income as an additional guarantee on their child’s mortgage, meaning the child can borrow more.

But the fractional ownership platform also means that these parents can also build up an actual equity stake in the house by paying some of the monthly mortgage payments.

This same platform means family or friends can put money into the house (eg. for a deposit) and legally own a small fraction of the property.

The idea is that this all makes it easier for young people to borrow more money and get on the property ladder, as it makes the business of borrowing money from family and friends clearer and simpler. 

The bigger picture, says CEO Rice, is that due to high UK house prices most young people are locked out of the property market and forced into a situation where they are paying more in rent than they would be if they could get a mortgage.

The latest English Housing Survey found that 41% of people in the age bracket live in a home they own, down from 59% in 2003. 

Meanwhile, the same survey found that the average UK renter spends 35% of their income on rent compared with 18% for homeowners paying a mortgage.

“Homeownership has moved out of reach for millions of young people, denying them the financial security that previous generations have taken for granted,” says Rice.

“By helping more people to help their loved ones, we’re not only providing better ways for families to lend a hand but also making it possible for millions to do this where they couldn’t before.”

Co-founder Guy-White added: “We’re measuring our success by the number of people in the UK who own their own home.

Generation Home is not the only UK startup tackling mortgages; London-headquartered Habito raised a £35m Series C in 2020

Big backers

The $30.4m Series A funding round was led by Mithril Capital, the investment fund founded by Ajay Royan and Peter Thiel. 

It brings the total equity financing raised to-date by Generation Home to $38.9m, following an unannounced $8.5m seed round in August 2019.

Other participants in the Series A financing included Firstminute Capital, the seed fund cofounded by Brent Hoberman, which led the company’s seed round, as well as existing shareholders Entrée Capital, JamJar, Third Kind Ventures and La Famiglia.

It is also backed by some high profile angel investors including Blomfield, who has made a series of angel investments since stepping down as Monzo CEO, as well as the founders of Eventbrite Kevin and Julia Hartz and former TransferWise head of growth Joe Cross.

The Series A funding also comes on the heels of a £300m debt financing deal with NatWest Markets.

Ajay Royan, managing general partner of Mithril Capital, says that the firm was investing because they saw a huge market in making it easier for young people to own their own homes. 

“It remains unacceptably difficult for young people to access fair-priced credit, even in the current era of historically low interest rates.”

Join the conversation

avatar
  Subscribe  
Notify of