Investment Note

Our investment in Bridgit

21 March 2022

Empowering Australians to buy their dream home before selling

At less than a year old (but with traction that we typically only see after a few years), we are beyond excited to announce our investment in Bridgit’s $7.7 million Series A round.

Problem and solution

Have you bought a house, only for the settlement date to get closer and closer, without the bank confirming that you have a mortgage? Or seen your dream house, but can’t make an offer because you haven’t sold your existing house?

Selling your old home and buying a new one can be daunting. The uncertainty of timing of sales, financing and complex processes can make the job seem like a nightmare. 

Bridgit strives to solve this problem by offering a simple bridging loan which allows customers to buy a property and deal with the sales process after. Their user-experience focused technology qualifies customers for funding in just hours (unlike banks who take weeks, sometimes after the property you wanted has already sold). 

And their traction speaks for itself:

  • $500 million in loan applications in the first 12 months
  • $250 million of approved loans 
  • $50 million of venture debt secured 
  • Loan book growing at 20% month on month
How does it work for a customer 

Bridgit refinances the customer’s existing mortgage and provides funding for the new mortgage. The customer then repays the loan on the sale of their old property. 

When a customer first applies, Bridgit applies similar criteria to a mortgage application. However, their exceptionally simple and fully digital process means that it only takes an hour to receive an approval, while having full confidence on the sale price of the property the customer wants to sell.

For homeowners, this saves the stress of selling their old property before buying, or worrying that the bank will not issue their mortgage in time. With Bridgit, Australians can now take the headache out of home buying. 

Investment thesis
For us, it is always founders first

We have known the non-executive director, Matt Leibowitz (CEO and Founder of Stake), for many years, working closely on a number of businesses together. Matt introduced us to the rest of the Bridgit team, and its Co-founders Aaron and Nick.

We were immediately impressed with CEO and Co-founder, Aaron Bassin, who brings 10 years’ experience across equity and debt capital markets, business strategy and product innovation. He has a strong background of executing capital strategies, building new technologies and high-performing team cultures. Previously, he was Head of Group Capital and Strategy for Australian consumer Fintech MoneyMe Limited. This included leading the successful completion of an ASX listing and establishing over $300 million in securitised warehouse finance. He also worked in Debt Capital Markets at KPMG providing debt advisory services to financial institutions. 

To complement Aaron, Head of Distribution and Co-founder, Nick Jacobs, has extensive experience across the financial services industry. For the past 7 years, Nick has been working as a Credit Advisor specialising in residential property finance, working with bank and non-bank lenders. Nick was selected by Mortgage Professional Australia as one of the Top 100 Brokers in Australia for 2020. 

The founding team’s depth and diversity of expertise, their synergy and hustle gave us all the confidence necessary to back them as the right team to solve this problem. The unique combination of their insights and long track record in debt financing, broker distribution and building a consumer brand is one of the secret sauces behind Bridgit’s success to date.   

Banks steered away from this market due to their structure, which created a unique opportunity for Bridgit

Approximately half of all Australian home loans are written by brokers. These brokers have previously not been incentivised to write bridging loans as banks do not compensate for these loans in the same way that they do for standard mortgage issuances. Additionally, banks are not incentivised to provide bridging loans where they could instead offer standard 30-year loans. 

This presents Bridgit with a unique opportunity to penetrate a market with minimal bank-led competition. This market is particularly enticing for Bridgit as they can take security over both properties (the purchase of a new property and subsequent sale of an existing property) and therefore have confidence over the soundness of their bridging product. With banks shutting the door on borrowers, Bridgit are bringing a disruptive financing opportunity to an untapped market. 

Market is proven in the US, and just beginning in Australia

In the US, companies like Bridgit, called “Power Buyers”, have been disrupting the property market over the last year. Power Buyers focus on empowering home buyers via products like bridging loans or similar instruments that provide them with liquidity before they sell their property. 

Power Buyers also boast 70% mortgage attachment rates. This means that 70% of their customers ultimately convert for future offerings, compared to the 20% industry average. 

Bridgit’s international competitors like Orchard and Homeward demonstrate strong product-market fit, growing multi-fold in the last year alone. Just in Australia, we estimate Bridgit’s serviceable addressable market to be about $1 trillion, and they are the first movers in this market. 

In summary 

Today, Bridgit guarantees funding in one of the shortest times in the world. And it does this at competitive financing rates and without compromising risk. Behind this is the unique mix of the co-founders' domain knowledge and user obsession that drives their technology. They already have strong leadership established in the key departments of growth, marketing, and credit management. The team also has an ambitious roadmap, including the introduction of further financing products leveraging the high attachment rates, and an expansion to the New Zealand market. 

As the first mover in a market with huge tailwinds, we believe in the team’s ability to execute and build a consumer brand that Australians love, a challenging task yet one the co-founding team have successfully done in the past. 

We can’t wait to see everything the team will achieve and are thrilled to be a part of this journey.  

There's a number of open roles at Bridgit, make sure you explore the latest opportunities.