For the average person living in Lagos – Nigeria’s most populous city, with more than 20 million people – apartment hunting is an extreme sport. Not only expensive rent – low to moderate income House can cost anywhere from $1,000 to $5,000 annually – but tenants also have to pay a year, sometimes even two, before moving in.
Landlords in the city, like any landlord in Nigeria, have been stuck accepting rent this way for decades because they find the monthly payments unsustainable; For them, the annual upfront fee reduces administrative costs and the possibility of tenant default. But in reality, tenants are put in the precarious position of having to find the first money on their first rental and then save some money from their paycheck for the next rental.
Dolapo Adebayo encountered this problem while searching for an apartment after returning to Nigeria from the UK In 2018, he and Akintola Adesanmi – who is no stranger to how rent works in Nigeria and also wants to make a change – brainstorm Spleena platform that partners with apartment owners to list their properties and offers tenants monthly, quarterly, and six-month rent payment options.
While Adesanmi worked for many years in Nigeria’s banking and fintech sectors, his family’s real estate background spurred him to set up a proptech startup. This relationship also provides Spleet with an important host network that is required to list multiple units when it goes live; The pitch to landlords is that Spleet will introduce proper KYC into the rental process and allow them to verify tenants and automate rental collection.
“Our solution on the tenant side is a no-brainer. It was the landlord who needed convincing, but that helped us have a network of hosts,” CEO Adesanmi said in an interview with TechCrunch about the company’s success. “So instead of going out and raising venture capital, we decided to launch because we were able to convince some homeowners to list their homes on this platform that we built. elaborate and explain some of their problems.”
The founders accumulated Spleet for 18 months before conducting a round of family and friends for $265,000. This process allows the four-year-old startup to establish good unit economics and significant traction before scaling, Adesanmi noted. There is clearly strong demand for its subscription-based product – it has had more than 68,000 unfulfilled requests since its launch – although the apartments listed on its platform may be expensive for the average tenant in Lagos. Many of Spleet’s customers are middle to high income earners (paying $200 to $1,000 monthly). For them, paying a premium for monthly or quarterly rent results in less cumulative savings than on annual rent.
Spleet’s growth has caught the attention of investors. This March, the company announced a pre-seed investment of $625,000. Then, in July, it became the first African startup to join New York’s MetaProp Accelerator. It is now announcing the completion of a $2.6 million seed funding led by the Los Angeles-based early-stage VC firm MacC Ventures. The round also welcomes Noemis Ventures, Plug and Play Ventures, Assembly Funds, Ajim Capital, Francis Fund, existing investors from the pre-seed fund, MetaProp VC and HoaQ Fund, and proptech execs such as Eduardo Campos and Paulo Buchucher of Yuca and Majed Chaaraoui of Insurami.
The investment will help Spleet scale its product: the leading rental financing and rental management solution. Rent financing solution, dubbed Rent now, pay later, which gives tenants access to mortgage-free loans of up to ₦3 million (~$6,000) at approximately 3.5% monthly interest to finance rent payments. Spleet has been testing the product since December – built on access to payroll – with a small number of users, who pay one month in advance while the company funds the remaining 11 months. Adesanmi noted that the percentage of bad loans recorded during this period was 1.2%.
“If you think about more developed countries that have rent data, they use that data for mortgages or school loans or things like that because you can verify yourself with the money data. rent that house,” the CEO said of the BNPL product. “So we get a lot of that kind of data. We will probably build a repository of that data so that our customers can leverage that data to access other goods and services.”
Spleet is also expanding its rental management services to include Collect, a service that automatically collects rent on behalf of landlords, and Verify, a tool that allows landlords and estate agents property checks and performs a full background check on tenants before offering leases.
Proptech has processed over $3.5 million in rent since its inception and attracted more than 35 individual and business landlords; the latter lists multiple housing units at once. Spleet also already has over 1,000 tenants, and while that may seem small, it’s worth noting that their average long-term value is 26 months.
For years, proptech, unlike fintech, has not seen explosive growth in Africa even though real estate needs as much innovation as financial services in the region. But there is recent activity suggesting that growth is imminent in the proptech space in Africa. One, startups are building solutions that are identical to other emerging markets, such as QuintoAndar In Latin America, Huspy in the UAE and NoBroker in India. Second, accelerators such as Techstars is creating programs specifically for such startups on the continent, while MetaProp is accepting more African proptech startups to join its program.
Ultimately, these disparate activities will fuel competition in the space. There are similar vendors in the relatively early proptech category that Spleet is in – for example, Rent Small Small, Kwaba and Muster – and it is expected to grow its market share significantly and surpass the competition after the rise. . “I think one of the things that got us grounded was that we didn’t address this as financial professionals. Proptech is vastly different from fintech, and the start is always slower,” Adesanmi said of Spleet’s competitive advantage. “If you look at Airbnb, Booking.com and other global players, even QuintoAndar, they start off slow before scaling. For us, we don’t use burning cash to develop our approach. We took the business model right before we started to develop the approach, and kicking off the work helped us perform well and understand the context better. “
As Spleet prepares to test new markets early next year, Marlon Nichols, managing partner at MaC Venture Capital, said his firm is proud to partner with the proptech company because “it continues to deliver a comprehensive solution that effectively serves both sides of the housing market and generates real money to combat homelessness in Africa. “