For the average person living in Lagos – Nigeria’s most populous city, home to over 20 million people – apartment hunting is an extreme sport. Not only is rent expensive – low to middle incomes housing can cost between $1,000 and $5,000 annually — but renters also have to pay a year in advance, sometimes even two before moving out.
Landlords in the city, like all others in Nigeria, have held onto accepting rent in this way for decades because they find monthly payments unsustainable; for them, annual prepayments reduce administrative costs and the likelihood of tenants defaulting. But in fact, tenants are put in a precarious position to find their first lump sum for the first year’s rent and then save some money from their paychecks for the next rent.
Dolapo Adebayo ran into this problem while looking for an apartment after returning to Nigeria from the UK in 2018, and Akintola Adesanmi – who was no stranger to how rent worked in Nigeria and also wanted to bring about change – brainstormed drizzlea platform that partners with apartment owners to list their properties and offers tenants options to pay rent monthly, quarterly and semi-annually.
While Adesanmi worked for years in Nigeria’s banking and fintech space, his family’s real estate background prompted him to found a proptech startup. This relationship also provided Splee with the critical network of landlords it needed to list multiple units when it went live; the pitch to landlords was that Split would bring the right KYC into the rental process and allow them to verify tenants and automate rent collection.
“Our solution on the part of the tenants was a no-brainer. It was the landlords who had to be convinced, but it helped that we already had a network of landlords,” CEO Adesanmi said in an interview with londonbusinessblog.com about the company’s launch. “So instead of going out and raising venture capital, we decided we were going to start up because we could convince some landlords to list their homes on this platform that we built and avoid some of their problems.”
The founders started Splee for 18 months before conducting a family and friends round of $265,000. This process allowed the four-year-old startup to build a good unit economy and significant traction before scaling up, Adesanmi noted. It also became apparent that there was high demand for the subscription-based product – it has had over 68,000 unfulfilled requests since its launch – although apartments on the platform can be pricey for the average tenant in Lagos. Many of Split’s clients are middle to high income earners (paying between $200 and $1,000 monthly). For them, paying a premium on monthly or quarterly rent is better than saving less cumulatively than for the annual rent.
The growth of Splet has caught the attention of investors. In March, the company announced a $625,000 pre-seed investment. 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 startup VC firm MaC Venture Capital. The round also welcomed Noemis Ventures, Plug and Play Ventures, Assembly Funds, Ajim Capital, Francis Fund, existing investors of its pre-seed, MetaProp VC and HoaQ Fund, and proptech operators such as Eduardo Campos and Paulo Buchucher of Yuca and Majed Chaaraoui. from Insurami.
The investment will allow Splee to scale up its products as the flagship rental management and rental financing solution. The rental financing solution called Rent now, pay later, gives tenants access to unsecured loans of up to ₦3 million (~$6,000) with an interest rate of approximately 3.5% per month to fund rent payments. Splet has been beta-testing the product since December — built on the back of payroll access — with a handful of users, who make a one-month deposit while the company finances the remaining 11 months. The percentage of non-performing loans recorded during this period stands at 1.2%, Adesanmi noted.
“If you think about more developed countries that have rent data, they use that to get a mortgage or a school loan or something like that because you can verify yourself with that rent data,” the CEO said of the BNPL product. “So we get a lot of that kind of data. We will likely build a repository of that data so that our customers can use that data to access other goods and services.”
Split is also expanding its rental management offering for homes 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 research and conduct adequate background checks on tenants before offering leases.
The proptech has handled more than $3.5 million in rent since its inception and onboarded more than 35 individual and corporate landlords; the latter lists several residences at once. Slit has also housed more than 1,000 tenants, and while that may seem small, it’s worth noting that their average lifespan is 26 months.
For years, unlike fintech, proptech has not seen exploding growth in Africa, despite real estate needs as much innovation as financial services in the region. But there is recent activity suggesting growth is imminent in the African proptech space. First, 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 like Techstars are creating special programs for such startups on the continent, while MetaProp is accepting more African proptech startups into its program.
Ultimately, these various activities will promote competition in space. There are similar providers in the relatively early proptech category that Split plays in — Rent Small Small, Kwaba, and Muster, for example — and it expects to increase its significant market share and outperform the competition after the increase. “I think one of the things that kept us going was that we didn’t come to solve this problem as financial professionals. Proptech is infinitely different from fintech, and the onset is always slower,” said Adesanmi of Split’s competitive advantage. “If you look at Airbnb, Booking.com and other global players, even QuintoAndar, they started slow for blitz scaling. We didn’t take the burn money-to-grow approach. Let’s take a good look at the business model before we start growing, and bootstrapping allowed us to perform well and understand the landscape better.”
As Splee prepares to test new markets early next year, MaC Venture Capital’s managing general partner Marlon Nichols said his firm is proud to partner with the proptech company because “it remains a comprehensive solution.” offer that effectively serves both sides of the housing market and is involved in the fight against homelessness in Africa.”