Spleet secures $2.6 million in seed funding round

Spleet recently raised $2.6 million in a seed funding round, which was led by MaC Venture Capital, to expand its operations. Several other investors participated in this round, including Noemis Ventures, Plug and Play Ventures, Assembly Fund, Ajim Capital, Francis Fund, Daba Finance, and other angel investors. This round also included existing investors from Spleet's pre-seed round as well as Metaprop VC and HoaQ Fund.

Since its founding in 2018, the Nigerian startup Spleet offered solutions to the housing crisis in Lagos. The firm originally began as a marketplace where prospective renters could contact landlords and pay rent on a monthly basis, but it soon changed its focus to an integrated financial solution. Currently, Spleet gives tenants the option to rent properties and pay rent monthly while simultaneously giving landlords the choice to get the rent annually.

Akintola Adesanmi, co-founder and CEO of Spleet, stated on a conference call with TechCabal that the company's rent financing model would exit beta by the fourth or first quarter of this year. He cited a dearth of skill, which this seed investment helped to rectify, and a drive to collect data as the reasons for the delayed debut.

Because Nigeria lacks a standard credit scoring system, there are many non-performing loans (NPL). Adesanmi said that Spleet had incorporated an NPL rate of 6%–8% into the service in the beta phase to avoid a similar occurrence with its rent financing model.

He continued by saying that Spleet collaborated with several financial institutions to aid in loan recovery in order to become profitable. Since this kind of product isn't necessarily available in this market, being in beta for more than nine months has allowed it to gradually understand what default rates and non-performing loans would entail.

Spleet founders boot-strapped the startup for 18 months following its founding before raising $265,000 from family and friends. Before now, the four-year-old startup was able to achieve strong unit profitability and a sizable amount of engagement thanks to this strategy, Adesanmi said.

Despite the fact that the apartments posted on its platform could be quite expensive for the typical tenant in Lagos, it 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 payments. For many, paying more for monthly or quarterly rent is preferable to saving up more money over time to pay for yearly rent.

Since annual up-front fees lower administrative costs and the likelihood of tenants defaulting, landlords in Nigeria, have continued to receive rent in this fashion for ages despite the fact that they deem monthly payments to be unsustainable. Tenants are then forced to come up with a big amount for the first year's rent and then set aside some cash from their paycheck for the next year's rent, which puts them in a difficult situation.

Spleet's expansion has attracted the interest of investors. The startup disclosed a $625,000 pre-seed investment in March. Then, in July, it joined New York's MetaProp Accelerator, becoming the first startup from Africa.

With the investment, Spleet will be able to scale its main residential rent management and rent finance product. It will also give renters access to no-collateral loans of up to 3 million naira (approximately $6,000) with an interest rate of about 3.5% monthly through the Rent Now, Pay Later rent financing plan. A small number of users have been beta testing Spleet's product since December; they pay a one-month deposit while the firm covers the costs of the next eleven months. According to Adesanmi, the ratio of nonperforming loans for this time frame is 1.2%.

The proptech startup will also include two new services to its residential rent management offerings: Collect, a service that automatically collects rental payments, and Verify, a tool that allows landlords and real estate agents to run background checks on potential renters.

Since its launch, the Spleet has processed over $3.5 million in rent and signed up about 35 individual and corporate landlords, the latter of which simultaneously offers several housing units. Additionally, Spleet has welcomed over 1,000 renters. 

With this boost, according to Adesanmi, Spleet will create products for everyone involved in the residential rental industry. In the four years since Spleet's founding, he continued, agents had viewed the company as a rival, but now Spleet would create products for the agents.

Adesanmi asserts that Spleet can only offer an accessibility solution at this time. Spleet originally attempted to address the accessibility and affordability challenges in the rental market.