SmallSmall, Nigeria’s leading property tech startup, providing access to flexible living solutions using technology has raised $3m in funding to expand its operations and roll out new housing solutions.
When it launched in 2018, it set out to confront a housing problem that has impeded quality of living for decades and locked millions of Africans out of economic opportunities.
The startup cofounded by Tunde Balogun, Naomi Olaghere and Pidah Tnadah now operates in Nigeria’s two biggest cities, Lagos and Abuja, and has done over 25,000 monthly stays, has less than 7 percent rent default rate, saved property owners over $1.5 million in damages, and saved tenants over $1.2 million in brokers fees.
In its first 3 years, SmallSmall generated revenue of over $5 million and turned a profit in 2021. Its aggressive approach towards growth in an uncharted real estate space has allowed it to exceed its past 3 years revenue in 2022 alone, setting it up for a big and brighter future.
To effectively tackle the housing challenges in Nigeria and lower the access barrier, the startup rebranded and changed the company’s name from RentSmallSmall to SmallSmall in July, 2022; retaining RentSmallSmall as a product and adding new products – BuySmallSmall and StaySmallSmall under its platform. This way, it could help people rent quality housing and pay monthly; buy rental properties through financing; and book furnished bed spaces for as low as $4 per night.
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The startup participated in the Techstars Toronto Accelerator Program, in 2021 and was the first Africa proptech startup to be admitted into the program having received $120k as part of its pre-seed round. Following its participation, SmallSmall was selected as one of the top startups in the program.
Sunil Sharma, the managing director of Techstars in Canada says “Techstars Toronto was proud to be an early investor in SmallSmall as we saw enormous inefficiencies in the experience that renters face when getting accomodation in Africa. With the early traction and multi-aspect business model, Techstars decided to make a follow-on investment and join the latest funding round.”
It has now secured a $3m funding for its Seed round ($2m equity and $1m debt) with participation from Oyster VC, Asymmetry Ventures, Vivaz Capital, Resilience17 Capital and Niche Capital. Other Individual Angels in the round include Sean Fannan of Chartboost, Adam Meghji of Universe, Jimmy Ku of Flutterwave, Samir Goel and Wemimo Abbey of Esusu, Jason Njoku of Iroko and Tunde Kara of Vendease.
The funding will support its overall vision of providing flexible, quality housing solutions and help drive its new plan to provide financing to intending home buyers.
Speaking on the overall ambition of the company, Tunde Balogun, cofounder and CEO says they are set for the next phase of building on the set foundation from the last three years and consolidating on their achievements.
“What we have done in the last 3 years was to show that monthly rental was possible and homeowners would tap in and maximize the benefits from monthly rent payments. With our suite of products, we have created a new ecosystem for housing, wherein tenants can start a journey with us today and end up as homeowners in just a few years. For our Landlords, the peace of mind they get from working with us gives them confidence to grow their real estate portfolio and acquire more properties.
In a country with a population of over 200m people, it’s a big dream of many to become homeowners, but with one of the lowest homeownership rate in the world, less than 15 percent, and a less than 1 percent mortgage penetration with interest rate upwards of 20 percent, owning a home seems like a far fetched dream.
SmallSmall gives a new hope and opportunity that never existed before to intending home buyers by providing an interest free financing, first, to people that are looking to buy investment properties to earn rental income, then to people who are buying to reside. SmallSmall ran a pilot test of the product in 2021 with a number of buyers who made 40 percent to 60 percent down payment while the company financed the remaining, with a payback period of 12 months. The default rate recorded during the period was zero, Balogun noted.
“We’re riding on the success of our pilot test by lowering the barrier further. We will provide upto 80 percent financing to buyers, whilst the buyer will only be required to make a minimum of 20 percent down payment and they get a 6 years period to buyback from us at a pre-agreed price, zero interest. Our tenants who had built a good credit score with us by paying their rent on time, and our landlords who signed a 5 years contract on their listed properties can access upto 90 percent financing with 10 percent down payment and 8 years payback period”
The company recently went live with its mobile app available for download on Google and IOS stores. In addition, the company has rolled out other value added services for its customers to give them a unique and wholesome experience through and through.
Balogun says access to housing is an essential human need just like food. We all need to do more to ensure there is adequate access to housing. We will use the funding to do more and expand to other major cities in Nigeria including Port Harcourt, Enugu, and Jos before the end of Q1 next year. In addition, the funding allows SmallSmall to continue to build out its technology, as well as build partnerships with landlords, developers, property and asset managers, and other key stakeholders.
780 million Africans are stuck in an outdated rental system. Landlords collect rent one to two years upfront, yet they’re ravaged by high default rate and unfriendly legal systems. Agents charge 15 to 20 percent in fees, and add little or no value to both landlords and renters. Renters lose their hard-earned money to impostors posing as landlords and fraudulent agents who prey on the broken and disorganized system. To address the problems, starting with Nigeria, SmallSmall platform provides renters with access to monthly rent payment, and gives landlords a transparent way to get vetted tenants, earn more, and manage their properties.
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