Fronted, founded in 2019 by executives from Apple, Monzo, and Bud, aimed to revolutionize the rental market by offering credit products to help renters finance deposits using open banking technologies. Despite raising over £20 million and achieving initial success, the company shut down in 2023 due to rising capital costs and economic challenges.
What was Fronted
Fronted's main product was rental deposit and financial solutions, leveraging open banking technology to offer affordable credit options for renters. Notably, the company raised $27.83 million, ranked No. 40 on the PropTech 50, and launched on Yobota’s core banking platform in 2021, backed by prominent investors.
Reasons behind Fronted's Failure
Rising Capital Costs Fronted faced a significant increase in capital costs, which escalated late last year. This surge in costs made it financially unviable for the company to continue offering its products at competitive prices. The increased borrowing costs were a direct result of repeated interest rate hikes, which strained the company's financial resources.
Economic Difficulties The broader economic environment posed substantial challenges for Fronted. The startup struggled with the economic downturn, which affected many startups and SMEs. The financial instability made it difficult for Fronted to sustain its operations and continue its mission to disrupt the rental market.
Market Price Elasticity Fronted's business model relied on offering affordable credit products to renters. However, the shift in market conditions meant that the company had to increase its prices significantly. The price elasticity of their target market did not support this increase, leading to a decline in customer uptake and ultimately contributing to the company's closure.
Impact on Investors and Market
Fronted's closure left investors grappling with significant financial losses, as the startup had raised over $27.83 million from backers like Fasanara Capital and Passion Capital. The market also felt the impact, with the shutdown highlighting the broader economic challenges faced by fintech startups amid rising capital costs and interest rates.
Lessons Learned from Fronted's Failure
Adapt to Economic Changes: Stay agile and ready to pivot your business model in response to economic shifts to maintain financial viability.
Manage Capital Costs: Keep a close eye on borrowing costs and interest rates to avoid unsustainable financial burdens.
Understand Market Elasticity: Ensure your pricing strategy aligns with your target market's willingness to pay, especially during economic downturns.
Investor Communication: Maintain transparent and regular communication with investors to manage expectations and build trust.
Risk Management: Develop robust risk management strategies to navigate financial uncertainties and market volatility.
Scalability: Focus on scalable solutions that can adapt to changing market conditions without compromising on quality or affordability.
Customer-Centric Approach: Prioritize customer needs and feedback to refine your product offerings and enhance market fit.
Frequently Asked Questions about Fronted
Who founded Fronted and what was its mission?
Fronted was founded in 2019 by Jamie Campbell, Simon Vans-Colina, and Anthony Mann to disrupt the rental market using open banking technologies.
What were the main features of Fronted's products?
Fronted offered a 12-month deposit loan and a "deposit that moves home with you" product, both aimed at helping renters finance deposits.
Why did Fronted fail?
Fronted failed due to increased capital costs, economic difficulties, and a mismatch between product pricing and market demand.
Looking Ahead
As startup founders navigate the challenging landscape of entrepreneurship, it's crucial to learn from past failures and plan for the future. Consider how Sunset can help you avoid similar pitfalls by handling all the legal, tax, and operational burdens when winding down a startup, allowing you to move on quickly and efficiently.
