Multiple mugging survivor turns hand to helping retirees stretch resources
Joshua Funder has been mugged twice in his life.
During a stint at the Boston Consulting Group in San Francisco in 2001, he was confronted in the street at gunpoint after hours of counting spinach leaves for the Dole Food Company.
A few years later, when working in Africa with the Clinton Foundation, he was running along a waterfront in the dark of night when he was cornered by six thugs with wooden clubs.
“I’d always preferred the clubs over the guns,” he jokes. “But getting mugged for counting spinach, you wonder why you are counting spinach. When you are mugged when you are trying to ship medicines across Africa to stop HIV, you don’t worry or ask why you are there. You get very clear ideas about whether your work is meaningful and worthwhile depending upon how you get mugged.’’
Funder’s work with the Clinton Foundation HIV/AIDS Initiative to reduce prices for antiretroviral medicines and initiate pharmaceutical supplies across eastern and southern Africa had a deep impact on the Rhodes scholar.
After spending the next decade as partner at GBS, Australia’s largest venture funds management firm — he left in January 2015 and three months later lodged a legal claim against the firm for unfair dismissal — Funder ran for preselection in former prime minister Bob Hawke’s old seat of Wills in Melbourne’s north.
Despite boasting the support of former Labor premiers Steve Bracks and John Brumby and former federal Labor minister Barry Jones, he was pipped at the post by current member Peter Khalil, a former security adviser to then prime minister Kevin Rudd.
In 2016 Funder started a technology company, its ambitions harking back to his experience in Africa.
“I wanted to do a good, big thing in Australia which met a net need,” he says of his firm known as Household Capital.
“It brings together a lot of my passions and experiences … Part of this story is re-using a useless PhD to innovate.”
Funder is joking about his PhD in intellectual property for biotechnology from Oxford University, which he says “enabled me to dive into the academic actuarial literature on longevity and differential risk pricing of reverse mortgages”.
Over the past two years, Household Capital has been developing a series of complex algorithms and a technology platform designed to help Australian retirees balance their savings, continue to grow their assets during retirement and harvest a sustainable income from their investments.
Highlighting the breadth of Funder’s Melbourne contacts, the industry superannuation funds-backed ME Bank, rich-lister barrister Allan Myers, former federal superannuation minister Nick Sherry, former Macquarie Group executive Jim Miller, former Skilled Group chief executive Greg Hargrave and other high net worths have all become investors.
The idea for Household Capital, which essentially allows retirees to use equity in the family home to fund their retirement expenses, also stemmed back to Funder’s chairmanship of the progressive think tank Per Capita, which was established by technology entrepreneur Evan Thornley in 2007.
“We did a big program there on how to reframe ageing. Historically it was considered a threat, a cost and a grey tsunami. We were the first to lead the way in saying, ‘It is 30 years of life people haven’t had — it is to be celebrated’.’’
Household Capital has now produced a white paper analysing the dilemma of retired Australians — while 80 per cent own their own home, many still experience high levels of relative poverty because they can’t access the equity in their properties.
“The values behind the white paper have drawn together the board members, the advisory board members and the investors in this company,’’ Funder says.
Household Capital has established a $100 million wholesale debt facility with ME Bank that it will use to offer loans to retirees, allowing them to transfer a portion of the value of their homes into their superannuation fund or an investment account.
The critics have already decried the interest rate on the loan — 5.9 per cent — as being too high. One this week claimed the loan amount to be repaid would double and redouble every 12 years.
Household Capital receives an establishment fee to cover the costs of putting the loan in place and interest is charged on the capital drawn from a person’s home. The final amount is paid when the person leaves the home and the house is sold.
But Funder says the rates offered in the future will fall.
“Our main mission is to test a product that meets the needs of Australian retirees and then scale it. To pass on the benefits of scale to customers by offering increasingly lower rates at low margins. And to have a high-scale, low-margin business,’’ he says.
Other critics also describe the product as a “dressed up” reverse mortgage, which are now much harder to obtain from the big banks following an Australian Securities & Investments Commission review last year that found many borrowers were using them without understanding the risks.
But Funder argues the Household Capital model provides a low interest rate and low loan-to-value ratio, better customer experience and partnered distribution with financial advisers and superannuation funds.
“We won’t lend for the short-term consumption of equity,” he says. “This is accessing the money people have already saved, which is very different to paying off a mortgage or money that a bank has transferred to you. We have tried to innovate from the front end to the back end to reflect those structural differences.”
One of Household Capital’s advisory board members is Bob Officer, a former chairman of the Victorian Funds Management Corporation and a former director of Transurban and the infrastructure investment group CP2.
“Household Capital has pioneered a new approach to access home equity, providing a holistic and sustainable retirement funding solution,’’ Officer says.
Funder first met Officer in 2015, around the same time the former was writing a book titled Watson’s Pier about his great-grandfather’s role at Gallipoli.
Stan Watson was an engineer with the South Australian Railways and landed at Gallipoli on April 25, 1915 before being instrumental in building a pier that was critical in the extraordinarily successful evacuation of the peninsula in December of the same year.
Stan was 97 when he died. His great-grandson was then only 15.
“It was a way to think and write and reimagine Australian identity in history,’’ Funder now says of his book.
He remembers meeting Officer in the latter’s kitchen in 2015 to pitch the idea of Household Capital.
“Bob could see this was a new approach. He challenged my thinking. He thought it was a need that had not been met and this was an approach he thought would be worth giving a try,’’ Funder says.
Another Household Capital advisory board member is Peter Harris, the former chairman of the Productivity Commission.
Given his background in venture capital, Joshua Funder isn’t afraid of failure. But he feels the attitude in Australia towards entrepreneurs who are prepared to “give it a go” has changed from almost two decades ago when he was mugged in downtown San Francisco.
“I have kids and a mortgage. I have put three years of my life into this, a large part of it unpaid. I don’t fear for my reputation,” he says.
“Australia is a different place now and people understand that the risks in entrepreneurship are worth taking, even if it doesn’t work out.”
He says his goal with Household Capital is simple: to reconnect millions of Australian retirees with their own savings to fund 30 years of retirement.
“So they can flourish. We will add stimulus to the economy to meet people’s own needs. This will have a powerful effect on how our economy is retooled to meet a retiree’s lifelong consumption for their wellbeing,’’ he says.
“And I will be very proud to see that outcome.”
Original article on The Australian
Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available on request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434. Australian Credit Licence 391876.