Frontier Digital Ventures, a tech-focused venture capital has invested USD1,2 million on ToLet.com.ng.
The site is a classified for lease and renting of apartments and other real estate property.
ToLet.com.ng was founded in 2012 as a competitor to OLX, a bigger rival that promotes everything from fairly used goods to automobiles and property. The landscape for classifieds has also become bloated with series of startups entering the scene.
Fikayo Ogundipe, CEO ToLet.com.ng told Forbes that “The new funds raised will be used to improve the platform’s technology offering to both property seekers as well as that used by listing agents. The rest of the funds will be channelled into improved marketing efforts and aggressive expansion across Nigeria over the next 12-18 months,”
The startup is not as new as its bigger rival who are not as niche as its operation. In 2013, Spark.ng, a digital accelerator invested USD230,000 in the startup which led to its renaming from Estanode.com to ToLet.com.ng.
While major eCommerce players have been facing capital adequacy challenges, the fundamentals of classified sites such as ToLet.com.ng cannot be ascertained. It is clear from the tone of the company that the startup has started seeing traction in terms of revenue. The company could not have turned profit either.
As opposed to its biggest rivals who do not practically charge anything but banking on the strength of their domain to then monetise their services in future; ToLet.com.ng collects commissions from every sales closed on its sites. Fikayo described as “performance-based”. Elaborating on the company’s business model, he said “Our research showed that Nigerian real estate agents prefer the model of sharing commissions on closed deals as against paying subscriptions that don’t have guaranteed returns”
This model is the opposite of Chekki.ng’s approach. Chekki is a classified site that lists mostly fairly-used cars. Chekki simply charge sellers for every car posted on its sites whether it is sold or not. While this guarantee the company an upfront revenue and it can simply plan its growth strategy, it is a disadvantage because its competition- OLX, Efritin and Jiji do not charge a ‘dime’ for all listings.
The fact that ToLet.com.ng has worked monetisation into its model is attractive, whether its USD1,2 million can match the firepower of OLX and other competitors is like begging the question.
As a niche player, the site might be able to focus on real estate and do it better than its other competition.