London based Home Services start-up Hometree has raised £7m in a funding round led by leading FinTech VC Anthemis Group, and existing investors DN Capital and Literacy Capital – the fund led by ex. Capita CEO Paul Pindar. Silicon Valley Bank also participated in the round alongside Gumtree Founder Michael Pennington & many of Hometree’s existing shareholders.
The funding round comes on the back of a significant growth spurt for the start-up – which originally started in the home heating market, but has since expanded into the Home Cover or Home Emergency Insurance market – pitting them up against industry giants British Gas & HomeServe. The company expects Y-on-Y growth in 2020 to be greater than 300%.
According to the company, growth has accelerated since the start of the lockdown in March as most people across the UK stayed at home, and the demand for home emergency products increased. Although millions of homeowners were placed on furlough, the company said the fear of breakdowns at home kept the Home Cover market in strong demand, and the resilience of their business model meant they saw very little customers cancelling their direct debit.
This demand was bolstered by the fact that some of the industries largest players struggled to adapt to the new reality and turned off all marketing activity from April – leading to a surge in demand for alternative providers.
As a tech-first company, Hometree was aided by the fact that their workforce was able to seamlessly transition to work from home, and their engineers were categorised as key workers and able to attend home emergencies – whilst ensuring all necessary precautions to avoid coming into close contact with a homeowner.
Throughout lockdown, the company has also successfully announced exclusive partnerships with leading challenger energy suppliers Good Energy, Pure Planet and So Energy – offering their customers access to a suite of home cover policies. Although challenger suppliers such as these have taken significant market share from the Big 6 energy suppliers over the last 5 years, many customers still struggle to leave the incumbents as they have become used to having a home cover product or boiler servicing included in their energy tariff. By offering homeowners a genuine alternative to the Big 6’s offerings, Hometree is confident it can assist the challenger suppliers with the goal of making the energy market fairer for all customers.
Hometree has caused quite a stir in the Home Cover market in the last 18 months, with their “No Claims, No Price Hikes” message resonating with customers who have suffered years of price hikes from the industry’s leading players. Hometree feels its approach of rewarding loyalty, rather than penalising it is the only way to do business in today’s ultra transparent world – a view in line with the FCA who are increasing their scrutiny of the wider UK insurance industry and the so-called “loyalty penalty” many customers get by staying with one provider for years.
As a highly tech enabled company, Hometree is leading the transition of the home services industry to a digitally-led one – where consumers will increasingly be able to expect the same level of service they routinely experience from leading tech companies such as Ocado or Deliveroo. For Hometree, the future for the industry is harnessing the power of the Internet of Things and smart home hardware to move a reactive customer experience into a proactive one, where more tech-enabled providers such as Hometree are able to inform the customer that something has broken down, and perhaps even prevent the fault occurring in the first place.
Hometree Founder & CEO Simon Phelan said – “Our objective in the next 2-3 years is to become the leading challenger brand in the home cover market, taking share from the industry giants in the same way Bulb & Ovo have done in the energy market. This new funding will help us accelerate our plans at a time when homeowners across the UK need Hometree more than ever. We are incredibly excited to be able to help homeowners have one less worry at this incredibly stressful time in all of our lives.”
Anthemis’ partner Ruth Fox Blader, who will join the board said – “Hometree occupies a fascinating position in the middle of enormous shifts taking place in both the Insurance and Property markets. At Anthemis one of our highest conviction theses is Embedded Finance – where more and more we will see finance becoming an often invisible but critical embedded part of the products and services that power our lives, rather than being a service consumed independently. With a consumer product of peace of mind at home, but an insurance business model, Hometree perfectly represents this core thesis.”