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This UK startup got $9M so you’ll pay it to shrink your household bills – TechCrunch

The UK’s value of dwelling disaster has been making grim headlines for months — with no respite in sight.

Just this week, newspapers reported that inflation had hit 5.5%, a 30-year excessive, additional pushing up costs for on a regular basis necessities like meals. Worse is but to come as an vitality worth cap will finish in April, when bills are projected to rise by greater than 50%. The poorest households describe a stark alternative — between ‘heating or eating’.

Into this grim maelstrom a brand new London-based startup, known as Nous, is hoping to throw households a life-raft by providing a free customized report that explains how worth rises will have an effect on their prices and offers recommendation on how to adapt to inflation.

That’s simply the first step, although. The startup’s wider pitch and “social mission” is to use (first celebration) household finance information and (third celebration) vendor information to construct fashions that may progressively automate the administration of important service switching and/or contact renegotiating to provide a form of household savings-as-a-(subscription)-service.

Nous, which is pronounced to rhyme with ‘house’, talks when it comes to constructing an “autopilot” for routine household choices — which spans and scans vitality, insurance coverage, mortgages, broadband and different subscription companies to monitor exercise and steer households onto higher offers. 

The startup initiatives that its future subscription service will likely be in a position to save a “typical” household greater than £1,000 a yr. (Its personal service pricing would after all want to be set nicely under that to persuade laborious hit shoppers to purchase in.)

Nous tells us it even envisages having the ability to tackle a public ‘punching-up’ function — as soon as/if it’s working at scale, with excessive degree visibility into the buyer expertise — saying it may name out distributors it sees attempting to pull a swift one, resembling sneaking in an additional worth hike beneath the guise of a regular inflation charge rise, to use transparency and disgrace to force-correct dangerous habits. (The success that meals poverty campaigner, Jack Monroe, has had utilizing social media to publicly name out massively over-inflationary worth rises in grocery store ‘basics’ meals traces — or footballer, Marcus Rashford utilizing his social platform to drive change to free school meal contracts by showcasing horribly insufficient provision — could present some inspiration on that entrance.)

But first the fledgling startup has to do the laborious work of nailing down information entry, pulling off bespoke modelling and executing on automation applied sciences to ship on its consumer-friendly promise of savvy and seamless service switching.

For now, the 2021-founded startup is busy with product improvement. Currently it’s operating a closed beta as it works to develop fashions and hone decision-making heuristics with the purpose of constructing tech that may proactively shield shoppers from opportunistic vendor worth hikes and loyalty taxes. Or, nicely, that’s the dream.

As nicely as a dream, Nous has substantial cash behind it — it’s simply closed a $9 million seed spherical — so clearly isn’t in peril of a money disaster itself.

It can tout an extended record of early traders who’ve purchased right into a imaginative and prescient that co-founder and CEO, Greg Marsh, says goals to leverage the facility of information to work for not in opposition to the buyer for as soon as.

“There’s always felt to me to be something very problematic about the way that just as direct debit and other fintech innovations have created a lot of convenience for householders they’ve also made us susceptible — precisely because I can pay for my energy, I can pay for my mobile phone, I can pay for my car insurance on this sort of automatic mechanism… but that convenience creates this power imbalance because it puts the onus on individual householders to pay an enormous amount of attention exactly to where their money is going,” he tells TechCrunch, explaining the issue Nous is being constructed to sort out.

“In theory you can do that… but in practice, unless you are very, very self-disciplined, people don’t do that. And instead what [happens] — and it’s particularly households at the lower end of the income distribution, who are less financially sophisticated or who are just really, really busy… those householders get completely screwed.”

Marsh argues that this case — the place shoppers who aren’t hyper vigilant will find yourself overpaying for core companies — will not be the results of a couple of ‘bad apple’ suppliers. It’s “systemic dysfunction”.

“Basically everyone plays this game in the industry and all the pricing analysts and all the revenue management departments in all of these providers are playing the same very cynical game — which is how can I get someone in at a low price, how can I sell them a few things they don’t quite need… so people just end up massively overpaying,” he suggests. “So it’s that sense that unless you are really on it you will get taken advantage of.”

Nous’ competition is {that a} for-profit firm can assist repair systemic abuse by providing a subscription service — which means it’s clearly batting for the buyer. Albeit additionally as a for-profit firm with a transparent “social mission”. (And on that entrance Marsh notes that Nous intends to apply for ‘B Corp’ status to again up its “strict” pledge of neutrality vis-a-vis service distributors.)

He argues this mannequin is in marked distinction to the crop of (free-to-access) “web 1.0” worth comparability/service switching web sites which monetize client recommendation in different, much less up-front methods — resembling adverts, affiliate hyperlinks and/or taking a fee direct from distributors — asserting they will’t due to this fact declare to be solely neutral or at all times working solely within the client’s curiosity. (Aka “he who pays the piper calls the tune”, as Marsh places it.)

Whereas Nous’ enterprise mannequin will likely be pure “boring” subscription; no adverts, no service supplier commissions. And meaning it has to be pro-consumer for the reason that client would be the one really paying for the service.

Literally Nous’ prospects will likely be paying it to save them cash. So the connection is obvious.

Talking of cash, Nous’ substantial seed increase was led by early stage London-based Mosaic Ventures (an erstwhile Series A investor), with participation from greater than 65 angel traders — together with the likes of Tom Blomfield (co-founder of GoCardless & Monzo); Marc Warner (co-founder & CEO of Faculty.ai); Dan Hegarty (founder & CEO of digital mortgage dealer Habito); Eamon Jubbawy (co-founder of fintech unicorn Onfido); serial entrepreneur Brent Hoberman; ActiveHotels (Booking.com) co-founder Andy Phillipps; ex-number-10 strategist John Gibson (aka, one of many unique architects of OpenBanking); plus the previous head of Amazon UK; and the previous head of the CMA (now FCA), amongst others — so its pitch has evidently turned quite a lot of rich heads.

The founding group appears equally seasoned.

Marsh himself isn’t any startup debutant; beforehand he’s labored for Index Ventures. He additionally exited his prior startup, an upscale ‘Airbnb’ known as Onefinestay, to AccorHotels back in 2016 for $170M — earlier than shifting to the US to do a stint lecturing at Harvard Business School. Family commitments introduced him again to London and again to scratching his entrepreneurial itch as one in every of 4 co-founders at Nous.

The different three co-founders are: Christian Hølmer, CTO; Jon Rudoe, chief business officer; and Glen Walker, COO, who was a Trouva co-founder. The present management group additionally features a lady: Lydia Howland, who’s head of service improvement. And, as an entire, the group packs in quite a lot of cross-industry and tech experience — spanning stints at Facebook, Deliveroo, Ocado, Sainsbury’s and McKinsey, amongst others.

The giant measurement of Nous seed spherical is a measure of the calibre of the group, per Marsh. Or, put one other means, skilled expertise doesn’t come low cost.

As nicely as shelling out for expertise, Nous’ seed will likely be used to get the primary merchandise to market — and for early scaling inside the UK the place it stays centered for now.

Its first product — due for launch inside “a few weeks”, per Marsh (“hopefully early Q2”) — will likely be a free value of dwelling dashboard providing insights that it says will arm shoppers by offering “clarity” on worth rises; projecting how inflation will have an effect on their funds, and providing assist by way of options of how they could give you the chance to scale back the affect of rising prices on their household.

“It will show you on a personalized basis how upcoming price rises are going to affect you and your specific household situation,” explains Marsh. “You’ve got to do that analysis on a personalized basis to be useful. That’s not only useful because it provides insight — it’s also quite actionable insight. So it immediately alerts people to situations where they could jump on it if they have time and energy. But it also, we hope, will help inform people — as they have conversations with their employee rep or even directly with their employer about pay rises and things like that.”

As famous above, Nous’ grand imaginative and prescient is an enormous information automation play that can (not less than to a level) take over the administration of household funds — absorbing the executive tedium related to recognizing predatory worth rises and switching onto higher offers by, for instance, simplifying the method of getting quotes to transfer to a brand new provider.

“We already know, in our alpha testing, we can already see when switches should take place,” says Marsh. “And it’s not at all times switching, generally it’s additionally managing an current vendor relationship. Sometimes it’s nudging somebody to act the place it’s really comparatively simple for them to act however making the motion simpler to accomplish. So the archetype of that is in case you got to the comparability web sites and you’ve got to full in a 44-item questionnaire so as to get a quote for a brand new insurance coverage product. Actually 39 of these gadgets are data that we already know or can precisely infer. So all we actually want to ask is one or two questions — clarifying questions or confirmatory questions — and people one or two questions then permit us, with you authority, to go and pattern the market and determine if there’s a higher alternative.

“So you turn something that was previously a chore, and involved the big screen, into a quick thing you can do at the bus stop on your device and problem solved. So it’s partly about surfacing the action in a way that it’s easy for someone to grab and deal with and it’s partly around just deploying deploying better, smarter, existing technology solutions to make those processes more ergonomic, more convenient and easier. It also goes back to having an ongoing relationship with a household, rather than a transactional relationship.”

“We’ve got to make it really easy for households so that on the margin this is something they do, rather than something they leave until tomorrow,” he provides. “This stuff is boring, it’s traumatic, it’s inconvenient, it creates anxiousness — all of the explanation why people go away til tomorrow the factor they need to do in the present day. Which is exactly why direct debit creates comfort however it additionally creates the chance for individuals to be abused.

“We are very, very conscious — firstly of how important this is — but also how hard it’s going to be to get that level of trust and confidence with people that they are willing to share the information with us and that we can actually help them.”

This premium product would be the subscription service and that clear billing will, it hopes, present prospects with reassurance that it is working to take care of their pursuits — and never doing something nefarious with their information. (Its privacy statement additionally states upfront: “We don’t make our money through advertising or selling data.”)

“We want to be a business that’s fundamentally sitting with consumers, fighting for them,” provides Marsh. “Which is likely one of the explanation why we’ve ended up considering so particularly a few subscription mannequin — in a way it’s the toughest factor for us to do as a result of to justify a subscription mannequin we’re going to have to supply an infinite quantity of actual worth.

“But if we can get there — we think we can — and when we get there the place it allows us to occupy is a place that’s genuinely on the households side, not secretly selling thing because there’s commission revenue there or secretly advertising through the backdoor and actually being in the pocket of providers of mortgage services or providers of insurance services or providers of energy services.”

The purpose is to launch the subscription product this yr too, though Marsh gained’t be tied to a extra particular timeframe.

Open information and repair entry

For Nous’ enterprise to operate as supposed, it’s clear that entry to information — each on the buyer spending facet and on the seller pricing/tariff facet — will likely be paramount.

That means this startup is a transparent beneficiary of UK rules that open up entry to market and/or buyer information, by way of initiatives resembling OpenBanking which are designed to unlock innovation by fostering client belief.

OpenBanking is clearly one important piece for Nous, because the visibility it will get into household funds and spending will circulate, largely, from shoppers who agree to join their financial institution accounts, by way of this normal, offering it with a core feed of information on household incomings and outgoings.

The full element of companies contracts gained’t be present in financial institution accounts, although. But right here Nous additionally hopes to persuade shoppers to present it with entry to parse their electronic mail accounts — the place it can apply automation applied sciences to extract and distil related intel from vendor comms to higher perceive service provision (and client calls for).

It undoubtedly faces a little bit of a hen and egg problem of needing sufficient client belief to achieve sufficient account entry to construct sufficient utility which — Nous and its traders’ are satisfied — will finally win it a gradual income stream of subscribers.

It’s additionally clear that the free product has a really important function of onboarding accounts (and information) to assist Nous’ product improvement and general mission, in addition to appearing as a buyer acquisition funnel the place it can upsell its premium product.

Marsh is candid that getting all the mandatory data for Nous to successfully handle household companies with solely minimal ‘steerage’ wanted from the household is a core problem.

“There is no silver bullet. It’s not like there’s one data feed which just solves this problem,” he admits. “You get broad and shallow data from an OpenBanking information feed throughout a number of household accounts, you a searchlight information from connecting electronic mail accounts over time. You get data by connecting into walled backyard companies right here and there — however not each supplier will allow you to into these walled gardens, some are very defensive about their information as a result of, let’s be sincere, they’ve rather a lot to lose.

“The last thing that mobile phone providers really want is for people to really understand that they could probably save £150 a year if they moved onto a better tariff… that’s straight out of the profit line of the mobile phone companies. So we’re not complacent about this being an easy journey and we think there will be tension and friction over time. But we also think we’re doing the right thing by trying to be on the customer’s side and trying to make their lives simpler and fairer.”

Ultimately, Nous’ automated recommendation will solely be nearly as good as the info it’s in a position to entry — so the extra customers it can entice, and the larger demographic selection throughout its user-base, the richer its market intelligence, and the broader utility its service could present.

On the latter level there’s a clear threat {that a} subscription service gained’t give you the chance to assist these most in want in a price of dwelling disaster (since it is one other upfront value) — and low uptake on the low earnings finish may imply Nous’ visibility into (and assist for) household funds will get skew towards the ‘squeezed middle’, relatively than probably the most weak.

If so, a advertising and marketing technique that foregrounds speak of ‘getting wise to the cost of living crisis’ may threat trying cynical and opportunistic — as a result of the service could not really be reaching these households within the direst want.

Those on the bottom incomes will definitely be the toughest to assist as a subscription enterprise since there’s no escaping that it is yet one more outlay for people who find themselves already struggling and is probably not in a position to entry credit score (not to mention take a punt on paying extra now within the hopes of saving later).

But when requested about this Marsh says the group is probably providing the subscription product free to households that qualify for the federal government’s Warm Homes Discount scheme — as a technique to broaden its socioeconomic protection.

Elderly individuals, too, are sometimes on very low incomes and might be among the many most weak to predatory worth hikes that depend on shoppers intently monitoring tariff adjustments. And this cohort of households may additionally be disproportionately possible to obtain paper-based bills from service suppliers — and should not even be signed up for on-line banking, not to mention tech savvy sufficient to know the way to join their account to OpenBanking. So, once more, serving to that very-vulnerable-to-the-cost-of-living-crisis demographic by way of a data-fuelled subscription platform play could also be troublesome — with out ploughing main effort into focused outreach and assist. 

Responding on the overall level, Marsh primarily argues that Nous has to begin someplace. Albeit that someplace is “an intersection between where we can quickly and conveniently get data” — underlining what the ‘digital divide’ means in apply: The tech savvy and digitally armed stand to profit first and (possible) most.

If Nous can efficiently scale a service he does additionally suggests there could be scope to focus extra on addressing more durable to attain households, resembling by bolting on doc scanning instruments (i.e. so individuals may snap a photograph of a paper invoice to add the info).

He additionally notes that Nous is doing outreach to monetary literacy charities — and says it’s eager to work with related assist companies to serve its wider social mission.

But it will undoubtedly have its work minimize out to make sure that data-driven and automation-enabled value financial savings don’t additional entrench what are already massively unfair socioeconomic divides. 

On the query of why others haven’t tried a subscription mannequin to sort out the issue of predatory companies, Marsh suggests that is — not less than partially — linked to the maturing regulatory surroundings — which has been getting extra conducive to intermediaries.

“You wouldn’t have been able to build this business ten years ago. It would have been almost impossible. Until things like OpenBanking became properly implemented,” he says, noting that one in every of Nous’ traders was a key authorities sponsor of that initiative and including: “It’s great to see the UK actually having taken the lead on some of this stuff.”

The UK’s method of focused, sector particular regulation gives an operational framework for third events like Nous to entry information and maybe act as an agent on shoppers’ behalf. So it’s a case of regulation enabling consumer-focused innovation in these specific companies markets.

“I wouldn’t understate the important of this — the UK has a surprisingly sophisticated environment or ecosystem of sectoral regulation,” says Marsh. “So actually, although they are far from perfect, what the Ofcoms or Ofgems and the FCA [Financial Conduct Authority] and so on have done, sector by sector, is they have increasingly created an environment where vendors have to support data sharing and they have to allow agent-led switching.”

“We’ve seen the most extreme expression of that so far in the energy sector. Where energy companies are obliged to allow third parties authorized by households to manage the switch for them,” he provides. “The same sort of stuff is now increasingly mandated in other verticals. So [while] there will be some sectors which are more resistant to this but increasingly it’s very, very hard for vendors to stand against that.”

He doesn’t rule out future worldwide growth into different markets the place the group believes the mannequin may additionally work — assuming, after all, the appropriate regulatory framework is in place. But it’s totally centered on serving to UK houses for now.

“Over the last 12 months we’ve been watching with increasing concern just how serious the cost of living increases are actually going to be for UK households. And I know it’s making headlines now — it is going to hit really hard. And it’s going to keep hitting; it’s going to hit in April, it’s going to hit again in October when energy prices rises seasonally. It’s going to hit periodically through that period… So the average household’s going to end up stiffed for several thousand pounds… People are going to feel properly poorer — they’re going to feel really squeezed.”

“A free market economy [for essential household services] is only going to work if you have a fair market,” Marsh provides. “And a good market is simply attainable if individuals can have worth transparency, they do have alternative of distributors, they will change between distributors, they will obtain cheap pricing. So I believe that we’re comparatively nicely served within the UK by the regulatory group.

“The UK sectoral regulatory regime is a few years ahead of some of those other contexts [in other countries]. And so once we’ve got this working here clearly we aspire to taking it internationally but we’ve got to start somewhere.”

Disclosure: This TechCrunch reporter has recognized Nous’ CEO, Greg Marsh, since college, once we had been (briefly) in the identical faculty topic cohort. However that historic connection didn’t in any means affect our reporting of this startup   

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