This Week In Tech
Cofounder and CEO of Spleet, Akintola Adesanmi, speaks on the property technology sector in Nigeria, his startup, and other issues. Nosa Alekhuogie presents the excerpts:
What is property technology, and how does it work?
Property technology (prop tech) is an industry of technology professionals trying to digitise real estate processes. So, it can be real estate processes in construction, real estate in ownership or in renting, which is in the case of spleet. In any of those verticals that have anything to do with real estate or facility management. Any company trying to digitise processes around any traditional real estate function is a prop tech. Also, real estate cannot do without prop tech and vice versa. They are two different entities. Prop tech is the industry that comes to provide technology solutions for real estate. Real estate is responsible for the building, provision of property, and management of the property. Our goal is to look at these processes that they must go through and help them digitise that.
What would you say the future of prop tech is in Nigeria?
I think with us and more competitors going above that seed round stage, this year we saw two or three other prop techs raise a pre-seed, and people are beginning to sort of adopt and understand that we want this ease in our shelter lives from the real estate developers to the landlords, agents, tenants and those that want to buy homes. I think we’re going to see rapid adoption, because real estate is an asset class we can’t do without, so prop tech has to be adopted. It just took one or two players to first break that mould.
We saw cutStruct, who’s solving a problem for construction tech, that’s prop tech in construction, raised a pre-seed round two weeks ago. Estates Intel, who sort of gives data to real estate investors, raised a pre-seed round earlier in the year. I see more companies doing things like fractional ownership of real estate, different solutions coming up to meet that prop tech or real estate economy much more digitised.
Can you tell us about Spleet and how you operate?
We are a financial services solution trying to make renting much easier in Africa. When my cofounders and I moved back from college, we just figured that people did not know that they had a problem. What was this problem? Paying your rent one to two years in advance just didn’t make sense, especially as everybody we know earned monthly, periodically, but not just one year in advance. So, we decided to solve that problem and in doing that, we sort of built out a marketplace to connect landlords and tenants.
While we de-risk some of the problems that both parties had with verifying tenants, giving landlords adequate information to be able to manage their tenants and also collect their rent automatically, tenants now had this platform where we move the opacity of what was available on the market and for what price and what it looked like. We started back in 2018, bootstrapped for a while, and we started to find out that there were deeper problems we needed to solve. We raised friends and family round in 2019, after bootstrapping for a while, learning the back and forth of building something important like this. We raised about $260,000 from friends, family, and angel investors, all on the continent.
And then thinking about credit infrastructure and just generally how rent is being paid and managed in first-world countries, we have started to think about doing all those things and sort of morphing into a company that builds products or builds an ecosystem for the renting economy. And the four major players would be the landlords (the corporate or individual landlords), real estate agents, facility managers and tenants. How do we build products that are interconnected and make each process or each of these players’ processes much easier? Last year, we got into the metal prop accelerator program, which is the foremost prop tech-focused accelerator in the world, and we ended up raising a pre-seed round of about $625,000 from that and quickly after we closed our seed round, which essentially was to help us get the people that will build these products and scale these products across Nigeria first. Being our home country, even though we want to be a Pan African company, we are taking a more informed and data approach to how we scale as opposed to just scaling for scale’s sake.
What’s your view about the recent layoffs in the tech space?
I think it is a bear market. The confusion was that the end of 2020 and 2021 would be a bull market. Bull markets come every six to seven years, but people who are new to tech and don’t read history are unaware of that. So, they think that the bull market will stay forever, but they don’t stay forever. It is never really an employee’s market; it is always an employer’s market. It was bound to happen because a lot of investments went into technology that was nice to have but not necessary to have.
They could not stand on their own without venture capital. This bear market was bound to happen, there is a world war going on somewhere, there is a recession going on in the United States, who are the biggest funders of venture capital on the continents today, so it was bound to happen. This is when you can tell the strong companies that will survive. The companies that can raise money in this time and that can stay alive in this time are the stronger companies.
What other projects do you have in the pipeline?
We just launched a product called ‘Verify’. It is an on-the-go or on-demand API product for agents to verify tenants. Two major verification we do today for these real estate agents will be identity verification and anti-money laundering verification. So, we know that with some recent situations that have been happening, landlords are being held more responsible about who is living in their homes. We built that product as a response to that. It is still pre-revenue, but we have a pilot coming up with a potential partner that will see us get that product live, but the products can be used by real estate agents today. That’s how we think, like how we are building products that make these processes easier? Tenants can get to pay their rent monthly. Landlords can verify tenants and ultimately, collection of rent. Facility managers can manage all tenants in their buildings on our platform, and agents can close deals using our infrastructure.
Does the involvement of these middlemen increase the rent?
It is lower because customer acquisition is automatic. We are automating that process and agents cannot say they’re walking around looking for customers. We are finding those customers for you on a platform where they are ensuring that all the legal agreements are digitally signed. They are not doing any work and should not be earning anything. The only thing that is their job really is to manage that tenant overtime. That’s what we’re digitising and making much easier. It is hard because real estate is one of the oldest asset classes, and it is an asset class that is averse to digitisation and accepting technology globally.
Looking at it globally, Airbnb came into the market to up-end hotels because hotels have worked the same way for centuries. But Airbnb came with a model that was going up-end hotels, and this just happened in 2012. So, prop tech is not like fintech in the sense that it’s straightforward with the processes of how cash moves. There is a physical asset you are helping to digitise processes for, and the owners of these assets are much older, much experienced, much grounded people that are not very susceptible to change. So, it is a longer journey for Prop tech fintechs, but it is a more long-lasting journey because you are solving real problems.
Are there provisions for people who are not tech-savvy on your platform?
I will say to you that if you are not tech-savvy in 2022, I don’t know how you’re renting homes. What we’re digitising is the know-your-customer (KYC) form. The only difference is that we are going to do the verification that this person is who they said they are, and there’s no anti-money laundering. The two things we verify are identity verification and anti-money laundering verification. We are doing that with the APIs that we have. Nobody wants to fill out a piece of paper or form today as everybody is moving into the digital economy. So, if you are an agent that cannot get digitised, that is a huge problem, and I wonder how you would be successful.
How is Spleet addressing the housing deficit in Nigeria?
I would say the way we are addressing the housing deficits is to provide access to homes that people wouldn’t have had access to, more from an access perspective. Again, because we’re not solving for construction purposes, we’re solving for renting. But because we’re removing that opacity to what’s available on the market, people can access things they did not know existed. That’s a big contribution to the housing deficit as well. So, we always look at the housing deficit from the perspective that these homes have not been built yet, but the truth is that there are enough homes being built, but people just do not have access. And I think the barrier we remove is (the lack of) access.