This week in Technology
Co-founder and CEO of Spleet, Akintola Adesanmi, talks about the real estate technology sector in Nigeria, its beginnings and other issues. Nosa Alekhuogie presents the excerpts:
What is proprietary technology, and how does it work?
Real estate technology (plug-in technology) is an industry of technologists trying to digitize real estate processes. So it can be real estate processes in construction, real estate owned or leased, which is in the case of rift. In any of those verticals that have anything to do with real estate or facility management. Any company that tries to digitize processes around any traditional real estate function is a plug-tech. Real estate also cannot do without support technology and vice versa. They are two different entities. Prop-tech is the industry that comes to provide technology solutions for real estate. Property is responsible for building, providing property and managing the property. Our goal is to look at these processes they have to go through and help them digitize them.
What would you say is the future of prop technology in Nigeria?
I think with us and more competitors going above that round stage, we’ve seen two or three other prop technologies raise a pre-seed this year, and people are starting to kind of adopt and understand that we have this ease in our shelter lives want the real estate developers to the owners, agents, tenants and those who want to buy houses. I think we’re going to see rapid adoption because real estate is an asset class we can’t do without, so plug-in technology needs to be adopted. It only took one or two players to break that mold.
We saw how cutStruct, which solves a problem for construction technology, that is bracing technology in construction, raised a pre-seed round two weeks ago. Estates Intel, which provides data of sorts 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 to meet that prop technology or real estate economy much more digitized.
Can you tell us about Spleet and how you work?
We are a financial services solution that tries to make renting much easier in Africa. When my co-founders and I retired from college, we just thought that people didn’t know they had a problem. What was this problem? Paying your rent one to two years in advance just didn’t make sense, especially since everyone we know was earning monthly, periodically, but not just one year in advance. So, we decided to solve that problem and in doing so, we kind of built a marketplace to connect landlords and tenants.
While we mitigate the risk of some of the issues that both parties had with verifying tenants, by giving landlords sufficient information to manage their tenants and also collect their rent automatically, tenants now had this platform where we the opacity of what was available on the market and for what price and what it looked like. We started in 2018, bootstrapped for a while, and we started to figure out that there were deeper problems that we needed to solve. We raised friends and family in 2019, after starting for a while and learning the ins and outs of building something important like this. We raised about $260,000 from friends, family and angel investors, all on the mainland.
And then we think about credit infrastructure and just generally how rent is paid and managed in first world countries, we started thinking about doing all those things and kind of turning into a company that builds products or an ecosystem for the rental economy build And the four major players would be the landlords (the corporate or individual landlords), 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 involved in the metal prop accelerator program, which is the leading prop technology focused accelerator in the world, and we ended up raising a pre-seed round of about $625,000 from it and quickly after we closed our seed round, which was in essence to help us get the people who 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 take a more informed and data-driven approach to how we scale, as opposed to just scaling for the sake of scaling.
What is your take on the recent layoffs in the technology space?
I think this 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 technology and don’t read history are unaware of them. So, they think that the bull market will last forever, but they don’t last forever. It’s never really an employee market; it’s always an employer’s market. This had to happen because a lot of investment 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’s a world war going on somewhere, there’s a recession going on in the United States, which is the biggest funders of venture capital on the continents today, so it had to happen. This is when you can tell the strong companies that will survive. The companies that can raise money at this time and that can stay alive at this time are the stronger companies.
What other projects do you have in the pipeline?
We have just launched a product called ‘Verify’. It is an on-the-go or on-demand API product for agents to verify tenants. Two major verifications we do for these real estate agents today are identity verification and anti-money laundering verification. So, we know that with some recent situations that have happened, landlords are being held more accountable about who lives in their homes. We built that product as a response to that. It’s 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 build products that make these processes easier? Tenants can pay their rent monthly. Landlords can verify tenants and ultimately the 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 raise the rent?
It is lower because customer acquisition is automatic. We automate that process and agents can’t say they’re walking around looking for customers. We find those clients for you on a platform where they ensure that all the legal agreements are digitally signed. They do no work and should not earn anything. The only thing that is actually their job is to manage that tenant overtime. This is what we digitize and make much easier. This is difficult because real estate is one of the oldest asset classes, and it is an asset class that is averse to digitization and the adoption of technology worldwide.
If we look at it globally, Airbnb came into the market to improve hotels because hotels have been working the same way for centuries. But Airbnb came up with a model that goes up to hotels, and that just happened in 2012. So, plug technology is not like fintech in the sense that it is simple with the processes of how cash moves. There is a physical asset that you help digitize processes for, and the owners of these assets are very older, very experienced, very grounded people who are not very susceptible to change. So, it’s a longer journey for Prop tech fintechs, but it’s a more long-lasting journey because you’re solving real problems.
Are there provisions for non-tech savvy people on your platform?
I will tell you that if you are not tech savvy in 2022, I don’t know how you rent houses. What we are digitizing 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 is no anti-money laundering. The two things we verify are identity verification and anti-money laundering verification. We do this with the APIs we have. No one wants to fill out a piece of paper or form today as everyone moves into the digital economy. So, if you’re an agent that can’t be digitized, that’s a big problem, and I wonder how you’ll be successful.
How is Sleet addressing the housing shortage in Nigeria?
I would say the way we address the housing shortage is to provide access to homes that people wouldn’t have had access to, more from an access perspective. Again, because we don’t resolve for construction purposes, we resolve for rental. But because we remove that opacity for what’s available on the market, people can access things they didn’t know existed. This is also a major contribution to the housing shortage. So, we always look at the housing shortage from the perspective that these houses haven’t been built yet, but the truth is that there are enough houses being built, but people just don’t have access. And I think the barrier that we’ve removed is (the lack of) access.