For the average individual living in Lagos — Nigeria’s most populous city, with over 20 million people — apartment hunting is an extreme sport. Not only is rent expensive — low- to middle-income housing can cost between $1,000 and $5,000 yearly — but renters must also pay a year in advance, sometimes even two before moving in.
Landlords in the city, like any in Nigeria, have stuck to accepting rent in this manner for decades because they find monthly payments unsustainable; to them, annual up-front fees reduce administrative costs and the chances of renters defaulting. But in effect, renters are placed in a precarious position of finding their first lump sum for the first year’s rent and subsequently saving some money from their salary for the following rent.
Dolapo Adebayo encountered this problem while searching for an apartment after returning to Nigeria from the U.K. In 2018, he and Akintola Adesanmi — who was no stranger to how rent worked in Nigeria and also desired to effect change — brainstormed Spleet, a platform that partners with apartment owners to list their properties and offers renters options to pay rent monthly, quarterly and biannually.
While Adesanmi worked for years in Nigeria’s banking and fintech space, his family’s real estate background pushed him to establish a startup in proptech. This relationship also supplied Spleet with the critical network of landlords required to list multiple units when it went live; the pitch to landlords was that Spleet would bring proper KYC into the rental process and allow them to verify tenants and automate rent collection.
“Our solution on the tenant side was a no-brainer. It was the landlords who needed convincing, but it helped that we already had a network of landlords,” said CEO Adesanmi in an interview with TechCrunch on the company’s takeoff. “So instead of going out and raising venture capital, we decided that we were going to bootstrap because we could convince some landlords to list their homes on this platform that we had built and derisk some of their problems.”
The founders bootstrapped Spleet for 18 months before conducting a family and friend round of $265,000. This process allowed the four-year-old startup to establish good unit economics and significant traction before scaling, Adesanmi noted. It also became clear there was a great demand for its subscription-based product — it has had over 68,000 unfulfilled requests since launching — even though apartments listed on its platform can be pricey for the average renter in Lagos. Many of Spleet’s customers are middle- to high-income earners (paying between $200 and $1,000 monthly). To them, paying a premium on monthly or quarterly rent beats saving up cumulatively less than that for yearly rent.
Spleet’s growth has courted investors’ attention. 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. Now it is announcing the completion of its $2.6 million seed funding led by Los Angeles–based early-stage VC firm MaC Venture Capital. The round also welcomed Noemis Ventures, Plug and Play Ventures, Assembly Funds, Ajim Capital, Francis Fund, existing investors from its pre-seed, MetaProp VC, and HoaQ Fund, and proptech operators such Eduardo Campos and Paulo Buchucher of Yuca and Majed Chaaraoui of Insurami.
The investment will see Spleet scale its products: the flagship residential rent management and rent financing solution. The rent financing solution, dubbed Rent Now, Pay Later, gives renters access to no-collateral loans up to ?3 million (~$6,000) with an interest of about 3.5% monthly to finance rent payments. Spleet has beta-tested the product since December — built on the back of payroll access — with a handful of users, who make a one-month down payment while the company finances the remaining 11 months. Its nonperforming loans ratio recorded during this period stands at 1.2%, Adesanmi noted.
“If you think about more developed countries that have rent data, they use it to either get a mortgage or a school loan or things like that because you can verify yourself with that rent data,” the CEO said about the BNPL product. “So we’re getting a lot of that type of data. We will probably build a repository of that data so our customers can leverage that data to access other goods and services.”
Spleet is also expanding its residential rent management offerings to include Collect, a service that automatically receives rent payments on behalf of landlords and Verify, a tool that enables landlords and real estate agents to vet and carry out adequate background checks on tenants before offering lease agreements.
The proptech has processed over $3.5 million in rent since its inception and onboarded over 35 individual and corporate landlords; the latter lists multiple housing units at once. Spleet has also housed over 1,000 tenants, and while that might seem small, it’s worth noting that their average lifetime value is 26 months.
For years, proptech, unlike fintech, hasn’t witnessed exploding growth in Africa despite real estate needing as much innovation as financial services in the region. But there’s recent activity suggesting that growth is imminent in the African proptech space. One, startups are building solutions identical to other emerging markets, such as QuintoAndar in Latin America, Huspy in the UAE and NoBroker in India. Second, accelerators like Techstars are creating dedicated programs for such startups on the continent, while MetaProp is accepting more African proptech startups into its program.
Eventually, these various activities will foster competition in the space. There are similar providers in the relatively early proptech category Spleet plays in — for instance, Rent Small Small, Kwaba and Muster — and it expects to increase its significant market share and outpace competition following the raise. “I think one of the things that kept us grounded was that we didn’t come solving this problem as finance professionals. Proptech is infinitely different from fintech, and the beginning is always slower,” Adesanmi said about Spleet’s competitive advantage. “If you look at Airbnb, Booking.com, and other global players, even QuintoAndar, they started slowly before blitzscaling. For us, we didn’t take the burning cash to grow approach. We took a let’s get the business model right before we start to grow approach, and bootstrapping made us execute well and understand the landscape better.”
As Spleet prepares to test out new markets early next year, MaC Venture Capital managing general partner Marlon Nichols said his firm is proud to partner with the proptech company as “it continues to bring forward a comprehensive solution that effectively serves both sides of the housing market and makes true deposits to combating homelessness in Africa.”