Nigerian proptech SmallSmall raises $3M to provide flexible living solutions for customers • TechCrunch

0

Shortcomings have marred Nigeria’s rental system for years, affecting how landlords and tenants treat themselves. Most landlords collect rent one to two years in advance, while tenants struggle to find apartments because they deal with intolerant agents.

Many emerging proptech companies address such problems by providing better options for each of the stakeholders. One such platform is based in Lagos small small This gives tenants access to monthly rent payments and provides landlords with a way to screen tenants, increase their income, and manage the property. The platform announces that it has raised $3 million ($2 million in equity and $1 million) in seed funding, which it plans to use to expand to other major cities in Nigeria, including Port Harcourt, Enugu and Jos, before the end of the first quarter of 2023.

Tond Balogun He co-founded the startup, formerly known as RentSmallSmall, with Naomi Olager And the Bidah calling him In 2018 after returning to Nigeria from UK and finding it difficult to get an apartment where he can pay monthly. CEO Balogun told TechCrunch in an interview that this experience led him to research how to create solutions for the market, and in conversations with realtors, he quickly discovered that doing so was a two-way street.

“We are starting to understand the pain points that landlords are experiencing. Although they collected a year’s rent up front, the default rate for the annual system is very high because when people’s finances are damaged, they may not be able to pay the subsequent rent,” he said. “The legal process to evict tenants where they will have to wait six to 12 months is also not supportive of landlords.”

The CEO argues that with Smallsmall’s monthly model, landlords can speed up this pending process when they give notice. But this is only part of the package for them. SmallSmall also allows landlords to access quality tenants and reduce defaults by receiving monthly payments as they receive additional margins of around 10-15%, Balogun added.

For the tenants, it is convenient to manage their finances better by paying the monthly rent and the respite that comes with not dealing with housing agents that SmallSmall provides. Balogun also mentioned that when customers pay their rent on time, they build their credit profiles on the platform, allowing them to access financing if they sometimes default. Some of SmallSmall’s competitors include SplitCopa and Mister.

“Our market is for young professionals with an average age of around 28. It is a huge market,” the CEO said of Nigeria’s monthly rental potential. “We surveyed nearly 3,000 people last year in Lagos, which showed that 80% of them wanted Pay the rent monthly. And that tells you how much adoption the monthly space could get if the markets eventually opened.”

Supply and demand rarely converge in the real estate market in Nigeria as there is a housing shortage where demand vastly outweighs supply; Nor does it help that house prices and inflation continue to rise at the same time. SmallSmall, for example, has more than 476,000 people registered on its platform since 2018. While 80,000 of that number are on its waiting list, the company has only served 1,500 people. “This shows the huge demand, relative to the supply, which is very little,” Balogun added.

Young founders (LR: Pidah Tnadah, Tunde Balogun, Naomi Olaghere).

To increase the supply pool and create options for customers, Smallsmall rebranded it from RentSmallSmall in July. The latter is now one of three product lines, including BuySmallSmall and StaySmallSmall.

small rent It allows users to rent housing and pay monthly. small small buy It identifies newly built properties by reputable developers that meet the company’s market demands: studio apartments, one-bedroom apartments, and two-bedroom apartments – and packages them as investment opportunities for young professionals looking to invest in real estate. When buying, these landlords turn to landlords and list their properties on RentSmallSmall so they can earn passive income when other users pay rent. StaySmallSmallOn the other hand, it allows users to reserve furnished bed spaces starting at $4 a night.

“Show was our bottleneck in a way, and we needed to be able to control the quality because many properties were in poor shape. We also wanted to provide a channel that could We encourage young people to own homes and invest in real estate by paying up to 20% down payment while we help them finance the remaining amount. This is one of the reasons why we are increasing debt financing.”

Share SmallSmall in Techstars Toronto Accelerator Program In 2021 it was the first African startup proptech to enter the program, receiving $120,000 as part of the pre-incorporation round. Sunil SharmaSpeaking of the investment, Techstars Managing Director said, “Techstars Toronto was proud to be an early investor in SmallSmall as we saw massive deficiencies in the experience tenants face when acquiring housing in Africa. With its versatile business model and early appeal, Techstars decided to make an investment later and join the latest financing round.”

The initial round welcomed the participation of other investors such as Oyster VC, Asymmetry Ventures, Vivaz and Niche Capital. Meanwhile, individual Angels such as Sean Artist from Chartpost, Adam Megji from Universe, Jimmy Koo from Flatwave, Samir Joel and Yimimo Abi from Isusu, Jason Ngoku from Iroko and Tond Kara from Vendez.

SmallSmall has processed over 25,000 monthly stays across Lagos and Abuja, which means a typical SmallSmall user stays an average of 17 months on the platform. proptech claims to have a less than 7% rent default rate, saving landlords over $1.5 million in damages and renters over $1.2 million in broker fees.

Having made more than $5 million in its first three years and turning a profit last year, SmallSmall wants to use this new investment to support its vision of “providing high-quality, flexible housing and financing solutions to willing homebuyers.” In addition, the startup will continue to build its technology and partnerships with owners, developers, property and asset managers, and other key stakeholders.

“When we look at housing fundamentals as a basic human need, it is not only when people are able to access homes but also home ownership,” the CEO added, noting that Nigeria has one of the lowest home ownership prevalence rates on the planet. world level. “Home ownership can improve the economic situation in one way or another because it generates passive income for people to meet other needs. So we want to play a role in that and help young people in their journey from renting to investing to finally buying real estate.”

Leave A Reply

Your email address will not be published.