The fintech startup Virgil has raised €2.1 million to provide funding for cash-strapped young professionals aiming to buy a home despite rising cost of living and stagnant wages, according to Tech.eu.
Virgil has now drawn investment from Alven Capital, LocalGlobe and Kima Ventures, along with angel investors such as Greg Marsh and Demetrios Zoppos, founders of onefinestay, Oleg Tscheltzoff, CEO of Fotolia, and Thibaud Elziere, head of eFounders.
Many millennials began their careers amid a global recession, and are living in metropolitan areas where property prices have skyrocketed. In Paris, price per square meter has soared 150 percent since 2000, even as wages have stagnated. Since 1996, home prices in London have risen 518 percent, while wages have likewise failed to keep up. As a result, millennials have faced unprecedented difficulties in buying a home, what Virgil calls “the stone ceiling.”
In a Financial Times poll last year, half of the millennial respondents said they’ve had to delay buying a home, making it the most widely shared concern among the survey’s respondents. Many of the respondents were young professionals with white-collar jobs. Roughly half were located in the UK, with another 16 percent from the rest of Europe.
Virgil offers a new kind of assistance for struggling, young, urban homebuyers, providing up to €100,000 to help purchase property.
“It’s not a loan, it’s equity,” according to the company.
For instance, if Virgil contributes 10 percent of the cost, they’ll own 15 percent of a property. If the owner doesn’t sell in ten years, they would have the option to buy Virgil’s share. If it’s sold before that, Virgil will have its contribution reimbursed. This way, Virgil either earns money on a resale, or breaks even on its initial investment.
The company offers the example of a €40,000 contribution they would provide for a buyer with a borrowing capacity of €390,000, to buy a €430,000 property in Paris.
“Becoming a homeowner is the first step in building up one’s net worth. We launched Virgil to enable everyone to take this first step in the best possible way,” said founders Keyvan Nilforoushan and Saskia Fiszel.
The company plans to use its new funding to further expand operations. They’re shooting for 100 transactions each month by 2020, and for 5000 monthly transactions by 2021.