FutureBricks is helping an industry lay foundations: Fintech interview 25
FutureBricks is a tech startup that enables people to invest savings in housing projects, which offer high interest and are secured against properties, while making money available to small building companies.
It is solving three problems in the UK through its platform where people can lend as little as £500 to house builders, for returns of up to 12%.
SME house builders struggle to get loans, there is a huge housing shortage in the UK and ISAs offer interest rates way below inflation. The first problem is solved through making money available to SME house builders in the UK, then secondly this indirectly helps address the shortage of homes in the UK, while thirdly giving people the chance to get good returns on their savings.
Meanwhile it is disrupting two parts of the financial services sector: SME lending and consumer savings.
I recently spoke to Arya Taware, founder of FutureBricks. She told me that once overcoming the challenge of being a young woman in an industry dominated by men, doing deals down the pub, she began work on the lending platform.
Taware was doing her undergraduate degree in urban planning, design and management, real estate development at University College London before taking up a role at a small house builder where she was tasked with finding good sites for building projects. “We would find lots of appropriate sites but in many cases the developers could not get funding,” she said.
“This was 2013 and was happening quite a lot, which got me thinking.”
She said there is a shortage of homes in the UK and it is the large house builders that have access to funds. But she said these companies are building houses for investments rather than for people to live in.
“This is where I saw the gap. The guys that are building homes for people to actually live in are not getting access to funds,” she said.
Her own challenges when looking for the best way to save money helped her with the part of the business aimed at investors. As a consumer she did not think investing in ISAs, stocks and shares or buy to lets were appealing. Be secured loans with high monthly interest payments would.
Having identified the problem to address Taware had to work out how to do it. “The only way to do this is through digital technology,” she said.
It started building the platform about 18 months ago. It now has an app with a fully automated process for lenders to go, including know your customer checks. Then the customer can chose which projects they want to lend to.
The company’s mobile app and web platform enables investors to sign up and lend in two minutes. The fully automated process includes things like anti-money laundering and KYC checks. Then investors can chose which projects they want to invest in.
The company was set up three years ago and the platform went live in late 2018, after getting the upfront capital and regulatory approval from the FCA required, which took time.
An initial obstacle for Taware was the fact that the building and financial services sectors are often archaic. “The challenge was I was a young woman straight out of university. It is a very traditional male dominated industry with deals happening in the pub,” she said
Today FutureBrick’s tech team is made up of six people based in India.
About £500,000 has been lend so far to five builders through the platform which currently has about 500 active lenders.
The building companies that receive the funds have a different dashboard. At the time I spoke to Taware she said the company was receiving about 100 applications from builders every month, with about 10% accepted.
“We have our own underwriting team that do the initial due diligence and then we use industry experts such as surveyors to complete this. It is a very heavy part of our business but it is behind the scenes
The first building project backed by the platform, in Southfields London, was four the development of a four bedroom house. It needed to raise £100,000 through the platform, which it successfully did through 18 investors who got 12% interest. The development worth over £1m is now complete and investors have had loans paid back.
Read the previous fintech interviews
Part 24 Esme, Part 23 The ID Co, Part 22 Currencycloud, Part 21 Tandem, Part 20 Tink, Part 19 Goldex, Part 18 Azimo, Part 17 Yoyo, Part 16 Bud, Part 15 Previse, Part 14 Finastra, Part 13 InstaReM, Part 12 Eucaps, Part 11 AimBrain, Part 10 Meniga, Part 9 TrueLayer, Part 8 InvestCloud, Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology