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This week saw the launch of Fronted, a new fintech focused on lending money to renters. It’s already generated plenty of buzz thanks mainly to the resumés of cofounders Simon Vans-Colina, Jamie Campbell and Anthony Mann — formerly of Monzo, Bud and Apple respectively — and the fact Passion Capital led its seed round.
But what is really interesting is what this launch says about the wider fintech ecosystem, highlighting how early-stage startups are finally getting up the confidence to launch after a tough year. It comes amid Europe's vaccine rollout, offering hope that the worst of the Covid-19 pandemic is behind us.
Fronted’s story is particularly illustrative. After first breaking cover in December 2019, the startup quickly ran afoul of the pandemic. The idea was to help renters move into new accommodation by lending them money for deposits. By a stroke of awful luck, the business began life at a time when people had no choice but to stay still.
This meant Fronted’s team was unable to harvest insights from product testers about what worked and what didn’t. They risked, as Campbell put it in a chat with Sifted, creating nothing more than “a cul-de-sac of assumptions”. And so, in April, the startup went into hibernation, pausing product development and putting most of its team on furlough. They would not return full-time until October.
In the interim, Fronted focused on providing educational content to renters about changes in legislation, while scrambling to secure seed funding. It ended up raising £375k, with both Passion Capital and the taxpayer-funded UK Future Fund contributing. Fronted finally, formally launches today after gaining authorisation from the Financial Conduct Authority in recent weeks. It is already fielding roughly 1k applications each month from beta users.
All praise the government
Campbell is under no illusion that the business would probably have folded had it not been for government support, with the Future Fund proving crucial to keeping them going. “We were just at the wrong point of time in so many parts of the business,” he said.
Back at the start of the pandemic, some (including a particularly vocal set of FT commenters) believed loss-making startups were not worth the taxpayer money it would take to save them.
The government thought otherwise, pouring £975.5m into struggling companies and many millions more via the furlough scheme.
Dom Hallas, executive director of Coadec, which lobbied like mad for the Future Fund, said its purpose was to “freeze” startups in place to allow them to continue at a later date. “The fund’s existence was an acknowledgement that it was not a normal environment,” he said. “So you are going to see some weird growth patterns.”
Startups like Fronted emerging after a spell in cryosleep is a hopeful sign for fintech. It suggests that the very smallest firms, having weathered a uniquely challenging year, may at last be in a position to share in the boom in demand for digital services.
And it has the government in no small part to thank for that. They just now need to prove that it was worth the money.