Kwaba, a rental financing startup, has raised an undisclosed amount in a pre-seed round from Ingressive Capital and ARM.
Kwaba enables low- and middle-income earners to pay their rent in convenient tranches, such as monthly. It also has a crowdfunding platform, RentCrowdy, that helps to raise fund to pay rent.
Kwaba was founded by Obinna Molokwu (CEO) and Jadesola Opawumi (CCO) in January 2020, and its mobile app was released in August. The app has garnered over 1,000 downloads in the Play Store.
The CEO of Kwaba said, "In a nutshell, RentCrowdy mobilizes funds and Kwaba disburses".
Although the amount raised in the pre-seed round is undisclosed, it can be estimated to be north of $200,000. Because Ingressive Capital invests between $200,000 and $400,000 at $2 million valuation for 10% equity and ARM invests up to $20,000 in startups.
ARM is a 20-year-old asset management firm that invests in and supports fintech startups through its Labs by ARM Accelerator. Kwaba participated in the second edition accelerator programme which took place in the first quarter of 2020, alongside Rise, Truesaver, Owoafara, and Quantis Finance.
"By investing in Kwaba, we are helping the banked and the unbanked in Nigeria to have access to loans and credit that would give them a better life", Uwem Uwemakpan, Director of Fund Operations at Ingressive Capital, said.
"COVID-19 impacted lots of Nigerians negatively, especially financially. And there has been a surge in the need for credit and we are glad that we can help make people’s lives a little better and provide shelter indirectly through Kwaba. We are glad to be a part of this innovation changing the housing sector in Nigeria".
Nigeria has a housing problem, particularly Lagos, its commercial capital and the largest city in Africa. With over 22 million housing deficit, about 108 million Nigerians are homeless.
"Successive governments have allowed economic inequality in Nigeria to reach extreme levels, a fact that is clearly evident in the housing sector", said Leilani Farha, United Nations' Special Rapporteur.
While newly built luxury dwellings are springing up throughout the cities — made possible often through eviction of poor communities, informal settlements with inhumane conditions are increasing.
According to the World Bank, Nigeria needs about ₦59.5 trillion to address the issue of homelessness. And as such, some people have argued that startups are ill-equipped to tackle the housing problem in Nigeria.
Startups such as Fibre serve as intermediary between landlords and tenants, and allow tenants to pay their rent in instalment. Muster is serving as Nigeria's Airbnb. And Spleet offers residential solutions with options of daily, monthly, and quarterly subscriptions.
Obinna said Kwaba is different from the competition because they are not limited to properties listed on their platform. "We offer our services to both people looking to get a new apartment and those that want to renew their rent", he said.
"Kwaba is helping to bridge the gap between property and finance. We understand the economic reality of Nigerian renters and have built our product to reflect this. We aim to improve the financial well-being of renters as we grow".
Product idea: I need a house, cant afford bulk 3m rent; a housing provider like @musterngr @spleetafrica pay for it— Polysaccharide Patriach (@bigbrutha_) November 9, 2020
I pay monthly at a premium (say 3.6m)
Using @mono_HQ they can determine credit worthiness (and are able to deduct monthly?)
We no dey find serviced apartments
Kwaba is on a mission to mitigate such scenarios by providing rental financing for those in search of new apartments or those renewing their existing rent. They offer quick funds at affordable rates and renters can access further credit facilities to purchase properties.