Apartment searching is an extreme sport for the typical Lagosian, who lives in the nation’s most populous city (nearly 20 million people). Rent is not just costly — low- to mid- housing can run between $1,000 and $5,000 year — but tenants must also pay a year in advance, and occasionally even two, before moving in.
Since annual up-front fees lower administrative expenses and the likelihood of renters defaulting, landlords in the city, have continued to accept rent in this form for decades despite finding monthly payments untenable.
But in reality, renters are put in a dangerous position where they must come up with their first lump amount for the first year’s rent and then set aside some money from their salary for the next year’s rent.
When Dolapo Adebayo returned to Nigeria from the UK and began looking for an apartment, he ran into this issue.
He and Akintola Adesanmi came up with the idea for Spleet in 2018, a platform that works with landlords to list their apartments and gives tenants the option to pay rent monthly, quarterly, or biannually.
Adesanmi was well-versed in how rent worked in Nigeria and also wanted to bring about change.
Adesanmi spent years working in Nigeria’s banking and fintech industries, but his family’s history in real estate encouraged him to establish a proptech business.
The landlords were convinced by Spleet’s promise to introduce proper KYC into the rental process, give them the ability to confirm tenants and automate rent collection. This relationship also provided Spleet with the vital network of landlords it needed to list multiple units when it went live.
According to the CEO Adeyemi in a recent interview, he said “On the tenant’s end, our answer was obvious. We already had a network of landlords, which made it easier for us to persuade the landlords that required convincing.
We decided to bootstrap instead of seeking venture money since we could persuade some landlords to list their properties on the platform we had established and mitigate some of their issues.”
For 18 months, the founders bootstrapped Spleet before raising $265,000 from family and friends. Before scaling, the four-year-old firm was able to achieve strong unit economics and a sizable amount of traction thanks to this strategy, Adesanmi added.
Despite the fact that the apartments posted on its platform can be expensive for the typical tenant in Lagos, it also became evident that there was a high demand for its subscription-based offering, as it has had over 68,000 unmet requests since debut.
Middle-class to affluent consumers of Spleet often make between $200 and $1,000 each month in salaries. For them, paying more for monthly or quarterly rent is preferable to saving up a larger sum of money for annual rent
Spleet’s expansion has attracted the interest of investors. The business declared a $625,000 pre-seed funding in March. Then, in July, it joined New York’s MetaProp Accelerator, becoming the first business from Africa.
It has now announced the closing of its $2.6 million seed round, which was headed by early-stage VC company MaC Venture Capital in Los Angeles.
Techbuild’s take
Spleet’s signature residential rent administration and rent finance solution will be scaled up as a result of the investment.
Renters can receive no-collateral loans up to $3 million ($6,000) with an interest rate of about 3.5% per month through the rent financing option known as Rent Now, Pay Later. With a small group of users, Spleet has been beta-testing the product since December.
The users pay a one-month deposit, and the company covers the costs of the remaining 11 months. According to Adesanmi, it had a 1.2% nonperforming loan percentage during this time.
Additionally, Spleet is extending its residential rent management services to include Collect, a tool that seamlessly collects rent payments on behalf of landlords, and Verify, a service that helps landlords and real estate agents to vet and adequately investigate prospective tenants before providing lease agreements.
Since its launch, the proptech has handled over $3.5 million in rent and signed up over 35 corporate and individual landlords; the former lists a number of housing units simultaneously.
While housing over 1,000 tenants at Spleet may seem insignificant, it is important to note that their average lifespan value is 26 months.
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