Sometimes called Nigeria’s Airbnb sometimes, ToLet.com.ng last week raised $1.2m/504m Naira Series A round of funding from Frontier Digital Ventures.
The money is going to be channeled into engineering basically to improve services to customers and agents alike. That said, money will spent on marketing and expansion into other cities in Nigerian presumably Abuja, Port Harcourt among others.
Founded in 2012 as Estanode by four young Nigerians (Fikayo Ogundipe, Sulaiman Balogun, Dapo Eludire and Seyi Ayeni), they had received $230,000 back in 2013 from Spark.ng which is owned by iRoko founder, Mr. Jason Njoku.
Talking more on the business model, the CEO Fikayo Ogundipe said they have relied on commissions over the years instead of subscriptions as some other competitors practice. This he said has encouraged listing agents to step up their efforts over the years.
Since the real estate boom in the early 2000s in Nigeria, there has been a sharp rise in the number of people buying property but as Mortgage facilities remain scarce to many, god and affordable rent has been a major business. It’s common to drive around the major cities in Nigeria and find a new properly been developed just around the corner with most of them owned by a minority.
It is said that Nigeria needs over 70tr Naira/$175b to reduce the current housing deficits. This is clearly impossible for a government whose national budget is just around $20b to meet. That’s where foreign direct investment matters and that’s what has been happening slowly since the country returned to democratic rule in 1999.
The cost of living in major cities is high vis-à-vis wages and this has further fueled the rush for rented property instead. As the current recession bites deeper, it’s even clearer that more people may opt for rent instead in light of inflation in prices of basic commodity.
The opportunity for businesses like ToLet.com.ng is huge. Till date, they report that they have brokered over $8m in transactions from over 20,000 listings on their website. They also say majority of the listed property comes from the over 3,500 real estate agents in their database.
It’s becoming a regular thing to see startups receive funding from external sources and this has a great impact on the overall economy eventually with respect to employment and capital.
Last year, Hotels.ng raised $1.2m from Omidyar Network and EchoVC Pan African Fund thereby valuing the company at $4m at the time. Ecommerce giant Konga.com raised about $40m in 2014 in a move that later made it Nigeria’s most visited ecommerce site. Most recently, Andela, the company that pays developers to code by training and connecting to jobs raised $24m from the Chan Zuckerberg initiative and other partners. They had raised $10m separately before then and the list goes on. Locally, there are upcoming Venture Capital companies with a focus on the burgeoning tech sector in Nigeria.
At last year’s Demo Africa event, Nigerian startups along with their Kenyan and South African startups dominated the scene.
Frontier Digital Ventures; the group behind this new funding round for ToLet.com.ng is a Malaysia-based firm with interests in emerging markets. We hear they invested $500,000 in real state startup MeQasa in Ghana. It would seem as though some of their biggest investments have been into real estate based startups including in Pakistan.