2022 Most Disruptive MBA Startups: Little Steps Financing, London Business School

Little Steps Financing

London Business School

Industry: Fintech

Founding Student Name(s): Panos Kyrkopoulos and John Frangis

Brief Description of Solution: The firm uses its advanced technological capabilities in risk, operations, and finance to provide parents with interest-free (0%) financing tailored to cover childcare fees. The firm’s financing solutions tackle the issues of childcare affordability in the UK and overseas that push parents (and especially mothers) out of work and deprive children from accessing high-quality early years education. Solving those issues, the company creates additional benefits for employers (high employee retention rates), the suffering childcare industry (high occupancy rates), and the government (growth in workforce, GDP, and wage tax bills).

Funding Dollars: We bootstrapped the business with £20,000 and then won an additional grant of £50,000 from IT company Sixberries.

What led you to launch this venture?

Kyrkopoulos: My personal struggle with childcare costs was the starting point. With two toddlers of 1 and 2 ½ years of age, our family’s monthly childcare bill seemed frightening. It could easily exceed £3,000 per month. Even with just one child, our household budget was quite tight because of monthly childcare fees. In fact, monthly childcare costs for just one child can be more than the average monthly mortgage payment in the UK. We wanted my partner to get back to work after the birth of our second child, but that seemed like a remote probability, because her net salary could not compensate for childcare fees. That is a very common problem in our generation. Childcare fees have increased 8 times faster than wages since 2008.

When John and I realized the depth and universality of this problem, we put the knowledge we gained from the MBA at LBS and our professional experiences to work. That did not happen at once of course. We had already been inspired by our entrepreneurship professors at LBS and exhibited our passion for entrepreneurship during our MBA. We took all courses relating to building new ventures and were waiting for the right moment to come and the right problem to tackle. We started Little Steps Financing immediately after our graduation.

Frangis: Indeed. We wanted to address an issue that impacts not only our generation, but also the future ones. With the rising cost of living, things will not become any better for young parents. That is an issue that everybody complains about, but nobody has managed to solve yet. Governments have put some effort into mitigating the effect of childcare costs, but they have created a complex net of complicated schemes that address the problem only partially.

Of course, there is also the excitement of building a new and innovative business from scratch, but there is also the aspect of bringing smiles to the faces of children and families. Helping parents, and particularly mothers to keep progressing with their careers, and allowing children to get access to a high-quality early-years education that shapes their future and development is always key to our motivation regarding building Little Steps Financing.

What has been your biggest accomplishment so far with venture? We have had a few actually. We’ve established a partnership with one of the largest nursery chains in London, won an award of a £50k grant, and earned admission to the prestigious incubator program of London Business School. However, one of our biggest achievements is our recent admission to the FCA Innovation Sandbox. For those who might not be familiar with the name, FCA stands for Financial Conduct Authority – the financial services regulator in the UK. Given the very high barriers to entry and high rejection rates, our acceptance into the FCA Innovation Sandbox with just a handful of other successful startups confirmed the viability of our innovation as the FCA considers Little Steps Financing to be one of the innovators in financial services in the UK. We are the first company to bring such an impactful financial product to the market and we believe that we can change the social landscape in the UK and overseas with it. We want to do things the right way and the FCA Sandbox gives us the opportunity to bring the product to the market and test it faster in the market, while making sure that we dot the i’s and cross the t’s.

How has your MBA program helped you further this startup venture? Without the MBA program, most probably there wouldn’t be Little Steps Financing. The MBA served as the window through which we glimpsed the world of entrepreneurship and new ventures. It brought our team together and connected us with professors and like-minded people who inspired us to get out of our corporate comfort zone and chase our passion for building meaningful businesses. We learned how to think entrepreneurially, as well as being taught the methodologies to build new ventures. LBS cultivated in ourselves a belief that we can do (almost) anything we imagine. Having that type of mindset can be very motivating and help you to overcome professional situations that appear as dead ends when they are just challenging but very solvable problems. Finally, it is worth mentioning the Entrepreneurial Summer School that runs every summer at LBS and the LBS Incubator. Both shaped us as founders and provided us with an invaluable network of people to whom we would never have access otherwise.

What founder or entrepreneur inspired you to start your own entrepreneurial journey? How did he or she prove motivational to you? During this journey, we have studied the entrepreneurial journeys of and met with many founders. As much as we admire people who started their own business, there wasn’t anyone in particular who inspired us to start Little Steps Financing. We draw lessons from other people’s experiences and their persistence and resilience. However, we are driven by our own mission to make childcare affordable across the world and understand that there is not a one-size-fits-all approach here.

Which MBA class has been most valuable in building your startup and what was the biggest lesson you gained from it? There are a few to mention here: New Technology Venture (Michael Davies), Pathways to startup success (Gary Dushnitsky), New Venture Development (Rupert Merson), Financing the Entrepreneurial Business (Keith Wiley, Luisa Alemany and Gary Dushnitsky), and of course the Entrepreneurial Summer School (Rupert Merson & Jeff Skinner) and the Incubator (Jane Khedair).

The biggest lesson drawn overall, however, was that with the right motivation and belief anything is possible. Through meeting the many entrepreneurs who were invited to speak to our classes, we understood that great businesses start from people, people who have an idea, just like us. That might not be very evident at the beginning, as aspiring entrepreneurs sometimes believe that other founders start with more resources than they do. Well, that is rarely the case. That understanding was very motivating.

What professor made a significant contribution to your plans and why? All the above-mentioned professors have contributed in their own way to our plans and business. Above all, we ought to mention that our relationship with them and other professors at LBS not only continues but becomes stronger over time.

How has your local startup ecosystem contributed to your venture’s development and success? First it is the London startup ecosystem that contributed greatly to the development of our venture. The city is full of networking events organized by the vibrant communities of investors, accelerators, incubators, and startups to which we have easy access due to the central location of our offices. Access to funding is easier here. Not only is the concentration of capital higher, but there is also plenty of expertise in dealing with and willingness to invest in new ventures. From that perspective, being a fintech venture, we feel we are in the right place.

And then it is the LBS start-up ecosystem that helped us a lot. Having quick and easy access to a plethora of founders, investors, and mentors affiliated to LBS, has been significant to the development of our venture and our guidance as founders.

What is your long-term goal with your startup? There are two long-term goals for Little Steps Financing. The first is to help families in the UK, US, UAE and in other key markets where private childcare is the only option for parents. The second is to see Little Steps Financing disrupt and impact in a positive and lasting way on childcare accessibility and to explore how we could help families and children more holistically with the educational financing needs of their children after their 5th year of age. Private school financing could be our next little step.

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