SmallSmall, formerly RentSmallSmall, has raised $3 million ($2 million equity and $1m) in seed funding to expand into other main cities in Nigeria, including Port Harcourt, Enugu and Jos, before the end of Q1 2023.
The seed round welcomed participation from other investors like Oyster VC, Asymmetry Ventures, Vivaz and Niche Capital. Meanwhile, individual angels such as 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 participated.
Founded by Tunde Balogun, Naomi Olaghere and Pidah Tnadah in 2018, SmallSmall gives renters access to monthly rent payments and offers landlords a way to vet tenants, increase their income and manage properties.
The propertytech startup has had more than 476,000 people register on its platform since 2018. While 80,000 of that number are on its waiting list, the company has only served almost 1,500 people.
To increase the supply pool and create options for customers, SmallSmall rebranded from RentSmallSmall in July. The latter is now one of three product lines, including BuySmallSmall and StaySmallSmall.
RentSmallSmall allows users to rent housing and pay monthly. BuySmallSmall identifies newly built properties by reputable developers that meet the company’s market demand: studio apartments, one-bedroom, and two-bedroom apartments — and packages them as investment opportunities for young professionals looking to invest in real estate.
When purchased, these owners turn to landlords and list their properties on RentSmallSmall so they can earn passive income when other users pay rent. StaySmallSmall, on the other hand, lets users book furnished bed spaces starting at $4 per night.
“Supply was our bottleneck in a way, and we needed to be able to control quality because many properties were in bad shape. We also wanted to provide a channel where customers can invest in real estate and work toward owning homes,” said Tunde Balogun about the BuySmallSmall product, which is based on the platform’s proprietary data.
“We’re encouraging young people to own homes and invest in properties by paying as little as 20% down payment while we help them finance the remaining. That’s one of the reasons we raised debt financing.”
SmallSmall participated in the Techstars Toronto Accelerator Program in 2021 and was the first African proptech startup to get into the program, receiving $120,000 as part of its pre-seed round.
Sunil Sharma, the managing director of Techstars, speaking on the investment, said, “Techstars Toronto was proud to be an early investor in SmallSmall as we saw enormous inefficiencies in the experience that renters face when getting accommodation 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.”
SmallSmall has processed over 25,000 monthly stays across Lagos and Abuja, meaning a typical SmallSmall user stays an average of 17 months on the platform. The proptech claims to have had less than a 7% rent default rate, saving property owners more than $1.5 million in damages and tenants over $1.2 million in broker fees.
Having generated over $5 million in its first three years and turning a profit last year, SmallSmall wants to use this new investment to support its vision of “providing flexible, quality housing solutions and financing to intending home buyers.” In addition, the startup will continue building its technology and partnerships with landlords, developers, property and asset managers and other key stakeholders.
“When we look at the fundamentals of housing as a basic human need, it’s not just when people have access to homes but also in home ownership,” the CEO added, noting that Nigeria has one of the lowest homeownership penetration rates globally. “Homeownership can improve the economic status in one way or another because it generates passive income for people to meet other needs. So we want to play a part in that and help young people in their journey from renting to investing to eventually buying real estate.”
