Selina raises $ 150 million to repay flexible home equity loans – TechCrunch

For many of us, our home is by far our biggest asset, and in the world of fintech, this leads to a logical extension: when you need money, borrow against that bigger asset. Today, a fintech called in London Selinawhich provides flexible funds to consumers on five-year terms for up to 85% of their home value – the so-called Home Equity Line of Credit (HELOC) – announces $ 150 million in funding to raise $ 100 million in homeowners loans.

The $ 35 million Series B stake is led by Lightrock, with former Picus Capital and Global Founders Capital backers also involved. (The latter two companies are partly affiliated with the Samwer brothers, who also built the Rocket Internet e-commerce incubator in Berlin.) The remaining $ 115 million comes in debt from Goldman Sachs and GGC. Hubert Fenwick, CEO who co-founded the company with COO Leonard Benning, said Selina did not disclose its valuation with this round, but a source said it was based on the standard B-series dilution of about 140 millions of dollars.

Selina plans to use the funding to continue expanding its operations in the UK before considering how to deal with other markets in Europe, which Fenwick called a “white space” because of the emerging HELOC market there. and launch more products around its lending business, including a credit card that will be released this year, which will raise funds from a customer’s loan to make the funds more accessible.

“The UK market is ready to conquer and the size is huge,” Fenwick said, estimating the potential housing stock in the country at $ 30 billion. “We need a big box to unlock it, so we believe cash flow will support UK businesses very quickly, but we also need capital to grow in international markets.”

When we last covered Selina in July 2020, the company was opening new roads in the UK and had just raised $ 53 million to provide HELOC service to small and medium-sized enterprises rather than individual consumers. Fenwick tells me that consumers have always been in her sights, but the company first had to secure regulatory approval.

“The real opportunity was the consumers,” he said. That happened in late 2020 and now 90% of Selina’s business is consumer lending, he said.

In both cases, the gap in the market is the same: people who need funds for a major project, say a building renovation or for educational purposes, could otherwise apply for a bank loan or refinance their homes for to receive some extra liquidity. Selina’s HELOC approach differs from them in part in terms of the speed with which its loans are approved – money can be disbursed in as little as 24 hours – and the fact that funds are distributed as required, which means consumers pay only part interest that eventually ended up.

These may be considered competitive with mortgage refinancing, but in fact Fenwick said the opposite is true: banks are strong partners for Selina because they are always looking for ways to prevent customers from getting mortgages and refinancing. some liquidity is often a way for their customers to stir. Offering these customers a HELOC is one way to prevent them from getting their mortgages. But it is not an area that banks will necessarily touch on themselves, he said.

“HELOC is owned by special lenders who combine credit card-type charges with mortgage insurance,” said Fenwick. “You have to manage liquidity differently. The primary mortgage market is much larger, so banks prefer to work with smaller companies and retain the mortgage customer. [as is] instead of entering a new market “.

Fenwick notes that Selina usually gathers a mix of her own data and that of third parties to determine a person’s suitability for a loan and to manage different aspects of the business, and that data science creates another barrier to entry for others to compete. . “Our algorithms are exclusive and specialized for the lending we do,” he said. “The stack is too big.”

Selina understands that because you only charge interest as you withdraw money, the interest rates you return each month will not be as high as someone who borrows and withdraws a lump sum. A comparative graph of a .000 50,000 loan shows how it works:

Image Credits: Selina

HELOCs are relatively common in the United States, says Fenwick, which is estimated to be a $ 150 billion market, with some of the biggest names in the field, such as Blend (now public), Noah and Hometap. The approach is relatively new in the UK, although Fenwick believes it is likely (and rapidly) to evolve not only because HELOC companies like Selina’s are getting the green light, but because home ownership is ubiquitous. and the fact that more people, as they move less because of the pandemic, have turned their attention to spending more money on things like home renovations or less frequent but much longer vacations.

“Historically, homeowners across the UK have not been served when it comes to access to the wealth created by their biggest asset – their home,” Ash Puri, a Lightrock development investor, said in a statement. “Selina’s team has achieved impressive growth with over $ 100 million in loans issued since its inception in 2019. Lightrock is pleased to support such an innovative team and looks forward to supporting Selina as it upsets traditionally rigid lenders.” .

“Selina Finance’s HELOC product is innovative and bridges the gap between consumer credit and mortgage markets,” added Anna Montvai, CEO of Goldman Sachs. “We are excited to support Selina Finance’s team in growing its corporate and lending portfolio.”

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