Nigerian Real Estate Startup, ToLet.com.ng, Secures $1.2m in Series A Funding Amidst Nation’s Housing Deficit Crisis

ToLet.com.ng, fondly referred to as Nigeria’s answer to Airbnb, recently secured a $1.2m (504m Naira) Series A round of funding led by Frontier Digital Ventures. This significant funding comes amidst the growing housing deficit in Nigeria, which stands at an estimated 70 trillion Naira ($175 billion).

Plans for the new funds are already underway. They will fuel engineering efforts to augment services for both customers and real estate agents on their platform. Moreover, a decent portion of the funds is earmarked for marketing initiatives and the company’s expansion plans into other thriving Nigerian cities, such as Abuja and Port Harcourt.

ToLet.com.ng started its journey in 2012 as Estanode. Founders, Fikayo Ogundipe, Sulaiman Balogun, Dapo Eludire, and Seyi Ayeni, secured an early investment of $230,000 back in 2013 from Spark.ng, owned by iRoko founder, Mr. Jason Njoku.

While discussing the firm’s business model, CEO Fikayo Ogundipe revealed that they’ve consistently emphasized earning commissions rather than utilizing a subscription-based model. This strategy has proven successful, stimulating listing agents to increase their efforts over the years.

Since the boom in Nigeria’s real estate sector in the early 2000s, housing demand has increased markedly. However, with the scarce availability of mortgage facilities, affordable rents have become a lucrative business. It’s not uncommon to spot new properties under development across major Nigerian cities, predominantly owned by a minority.

The harsh reality is that Nigeria requires over 70 trillion Naira/$175 billion to bridge the current housing deficit. Considering the national budget of the country hovers around just $20 billion, this stark discrepancy accentuates the crucial role of foreign direct investment, which has been gradually increasing since the reinstatement of democratic rule in 1999.

The high cost of living in major cities coupled with stagnant wages has escalated the need for affordable rented properties. Furthermore, current economic recession and spiraling inflation have tilted consumer preferences towards rental properties rather than ownership.

For businesses like ToLet.com.ng, this situation presents a massive opportunity. To date, they have brokered over $8 million in transactions, featuring more than 20,000 listings on their website, predominantly from their database of 3,500 plus real estate agents.

Increasingly, startups receive funding from external sources, a trend that positively impacts the overall economy in terms of employment and capital influx. For instance, last year, Hotels.ng secured a funding round of $1.2 million, while e-commerce giant Konga.com raised about $40 million in 2014, skyrocketing its valuation. This trend indicates the burgeoning confidence in the Nigerian tech sector.

Frontier Digital Ventures, the lead investor in this funding round for ToLet.com.ng, is a Malaysia-based firm with keen interest in emerging markets. Their previous investments include a $500,000 stake in Ghanaian real estate startup, MeQasa, along with several others worldwide.

Overall, the Nigerian startup ecosystem continues to gain momentum. At last year’s Demo Africa event, Nigerian startups, along with their Kenyan and South African peers, dominated the scene, indicating a promising future for the African tech sector.