When Akintola Adesanmi started Spleet in 2018, the original plan was to help common Africans, starting with Nigerians, find houses and pay rent monthly, seamlessly and cost-effectively. For anybody who’s rented a house before in Lagos, particularly, this might pass as the best news ever.
Adesanmi, an ex-product manager at Guaranty Trust Bank Plc now Guarantee Trust Holding Company (GTCO) and eTranzact, one of Africa’s pioneering payment companies, was frustrated by how much anxiety he experienced whenever his annual payment of rent was due. He wasn’t the only one feeling this way, his friends and colleagues felt like too.
So, he decided to do something about it: how about sourcing for understanding landlords who’d allow monthly payment instead of the “soul-sucking” annual payment? But finding that in Lagos is like finding a fish that lives on a tree.
So he launched Spleet, a marketplace to connect people with living spaces. He convinced property owners—corporate and individual landlords—to list their houses on the platform for monthly rent, which, of course, is very unusual.
For most Nigerian landlords, It’s better to chase a tenant once rather than 12 times in a year. And you can’t blame them; the annual rent payment cycle is their way of mitigating default risk.
Although Spleet was a good development for tenants, it wasn’t entirely so for landlords who are used to receiving lump payments and planning their fiscal year around it. While the startup kept attracting more tenants, it couldn’t match up on the landlords’ end. In fact, it took Spleet 15 months to onboard 16 landlords and about 101 spaces on the platform.
“Growth was slow on the landlords’ side. We just couldn’t add as many landlords as we wanted to on time. But on the tenants’ side, we had great occupancy rates—an average of 90% month-on-month occupancy rates.,” Adesanmi told TechCabal.
It became apparent that this model would not scale. But what would scale? That was the next question the startup needed to answer to unlock its growth potential and, ultimately, stay in business.
According to the Knight Frank Africa Report 2020-202, Africa is already suffering from a property deficit. That means, there are not enough homes to house the continent’s ever-growing population. To make things worse, the few decent houses available aren’t affordable, on the average. The cost of renting a house in Lagos, for example, is totally disconnected from the earning power of its inhabitants.
That’s two problems: availability and affordability. It’s expected that in the case of scarcity, things become expensive. But in a situation where availability can’t be readily solved, then a system that helps people meet affordability should be created.
So last year, after over 3 years of trying to scale its marketplace, Spleet realised that it must continue to create affordability for tenants—which is supporting monthly payment—but ensure that landlords could also get paid annually, which is the conventional setting it wished to disrupt in the first place.
Now that they had the problem figured out, how could they build a sustainable business model around its solution?
This is where MetaProp comes into the picture. MetaProp is a New York-based venture capital firm focused on the global real estate technology industry. It holds an annual proptech accelerator programme known to be the world’s foremost in that sector.
Getting into MetaProp changes everything
Before Spleet got into the MetaProp accelerator, the largest proptech accelerator programme in the world, last year, it had applied in 2019 but didn’t get in. At that time, MetaProp wasn’t familiar with the African business landscape, let alone the continent’s property market.
But Stripe’s acquisition of Paystack in 2020 created a ripple effect that got everybody—including MetaPro—interested in what’s happening on the continent. So, by the time Spleet reapplied, the accelerator was more versed about doing business in Africa, super curious, and ready to make an entry into the continent. Spleet became the first and one of the only 2 African startups that have ever gone through the programme. The programme only accepts 9 startups yearly.
The 6-month-long programme ended last month, and, on Tuesday, Spleet announced a pre-seed funding of $625,000 led by MetaProp VC with participation from Future Africa, FEDHA Capital, VFD Group, and Moonshot VC. Angel and syndicates—HoaQ, CEO of Squarefoot, Jonathan Wassersturm, CEO of Flutterwave, Gbenga Agboola, and others—also wrote cheques for the round.
But, besides the funding, the startup came out of the programme with perhaps the most important thing—a new direction. As expected, the programme helped them to further understand the rental culture in Africa and how to build a sustainable business around the solution at scale—hence a pivot.
“So, we’re essentially now pivoting to building an infrastructure for landlords and tenants. It won’t just be a marketplace. We’re building financial services for both landlords and tenants, facility management for landlords, and automation tools,” said Adesanmi.
What this means is that Spleet won’t just be a platform where people go to look for houses to rent, it’s now a platform where tenants can request a loan to pay for rent and then spread the repayment across a maximum of 12 months. This way, tenants can continue to pay rent per month and landlords who want annual payments can be served as well.
Adesanmi mentioned that the startup has partnered with a bank that provides the loan and then shares the return on the interest with them. Initially, before the rent-now-pay-later product, the startup had only made money from the rent paid by tenants.
Looking through the numbers, one can only ask how the startup was able to survive till now without external funding. For Adesanmi, being capital-intensive is the answer. Apparently, Spleet had raised an angel round of $265,000 in 2019 and has managed to stay afloat that long on that capital.
“There’s no point in raising when we haven’t figured out how to grow. We only knew what we must build, but we haven’t yet figured out how to scale it—so why raise capital?” said Adesanmi
Adesanmi said Spleet’s financing offering was launched into beta last week and has already recorded over $10,000 worth of requests. Something they likely haven’t experienced in their 3 years of operations. Going forward, it looks like Spleet is finally ready to become the go-to platform for everything residential in Africa.
Last month, it was reported that a bill seeking to compel landlords in the federal capital territory (FCT) to receive rent monthly has passed second reading in the Senate.
Similarly but more diplomatically, the Lagos state government planned to launch a programme where landlords volunteer to receive payment monthly, hoping that by acting as a guarantor in a new payments system, landlords would be encouraged to switch to accepting monthly rents.
Coincidence or not, Spleet is well positioned for this moment.