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Wednesday 21 September 2022

Habito’s backers keep up the (funding) habit

logoOver past years I have written about several UK mortgage broker start-ups, not all of which are still around today, at least not in their original form. Most prominent among the ‘late lamented’ is (was?) London-founded Trussle, whose £13.6m Series B funding round was led by Goldman Sachs back in May 2018 (see Trussle hussles another £13.6m).

This turned out to be the wrong bet, with Trussle succumbing to a fire-sale acquisition by US online mortgage broker Better in July 2021 for a reported valuation of some $9m. By then Trussle’s backers had piled in £26.7m since its launch in 2015. Media reports mooted Trussle was loss making, with 2019 revenues around £2m. In July this year Better announced it is to undertake a fake IPO (aka merge with a SPAC) at an expected valuation of a gazillion dollars or whatever. It’ll probably all end in tears as SPAC deals usually do.

I tell you this because Trussle’s archrival, London-based Habito, is alive, though not very well, and still living as an independent company despite a near-death experience a few months ago which led to the firing of a large chunk of its broker team (Source: FT Adviser 29/7/22). According to the report, Habito’s brokers were on a basic salary of £55k. Habito was founded in 2015 by forma Wonga strategy head, Daniel Hegarty. Confusingly (to me) Hegarty is still referred to as CEO in media reports yet is not listed as a Director of the company (legal name Hey Habito Ltd).

But Habito’s backers are keeping the faith, having just recently tossed another £5m into the pot (a filing at Companies House refers to a Series D round comprising £3.9m received in December 2021 and a further £2.9m in February and March this year). Prior to that, back in August 2020, Habito confirmed £35m of investment as part of its Series C fundraise, bringing the total amount raised since launch to more than £63m (see Backers get in the habit of backing Habito). Habito recorded revenues of £6.6m in the year to 31st Jan. 2021, up 28% yoy, and had succeeded in almost halving net losses to £11.4m. Habito’s wage bill was then £10.7m and the business employed 156 people.

At the time of its Series C round I referred to Habito as ‘a fantastic success story’ but cautioned that ‘they will need very supportive backers and (hopefully) a clear – though probably somewhat distant – plan to [reach] profitability’. Unfortunately, the numbers still look grim.

Posted by: Anthony Miller at 09:24

Tags: funding   startup   PropTech  

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