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May 10, 2022

Investing in DigsConnect

Why we invested in DigsConnect, the marketplace solving a problem experienced by almost every human being as they enter adulthood: student housing.
May 10, 2022
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Founder & CEO, The Delta

DigsConnect allows students to look through a directory of affordable rooms/apartments (known colloquially as ‘Digs’ in South Africa), chat with verified landlords, and sign a lease with complete peace of mind.

For students, it takes the stress out of finding a place to stay, often at a vulnerable stage in their lives when they are moving away from their parents for the first time. For landlords, it offers an easier way to find new tenants, on-demand support from a booking concierge, and transparent commissions on new leases. For both parties, search costs are dramatically reduced and the administration of signing a lease is majorly streamlined.

In four years DigsConnect has grown to over 100,000 active users, and have made just shy of 90,000 connections between students and landlords. This demonstrates an impressive match rate, one of the most important metrics in a marketplace, indicating that, in a metaphorical sense, very few beds on the platform are lying empty. Moreover, they have achieved this with just a team of 5, a staggering staff-to-user ratio which stands as a testament to the tight, scalable tech they’ve built.

2021 was an especially impressive year for DigsConnect. Their strategic partnership with enabled them to list over 1.3m new properties across 400 cities, in 30 countries, essentially overnight; solving their supply-side needs in one fell swoop. It helped them achieve 19.6x as many bookings in their most recent bookings season, as compared to the previous year, with 3x year-on-year sales growth - displaying solid growth at both ends of their funnel.

They can now take advantage of the academic seasons in both September (Northern Hemisphere) and in January (South Africa’s peak period). The diversified geographic representation gives them multiple seasons of activity a year, allowing them to bring in revenue year-round and have continual feedback cycles for their product.

The above alone made a solid investment case for DigsConnect, but there are plenty of other reasons why we found this South Africa-born startup attractive:

People: DigsConnect is led by a very complementary set of co-founders. Alex is a chaotically vibrant founder, packed with great ideas and very generous in sharing her advice with other founders. Greg is very organised, a diligent operator whose schedule you could set your watch by. Together they’ve built a great platform, and from very humble beginnings.

They met while on the Student Representative Council at the University of Cape Town, where they saw the need for easier student accommodation. When their very basic MVP saw immediate traction, Alex dropped out, and they built a business together. It’s a classic startup story of students seeking to solve student problems, iterating on and experimenting with an MVP, and turning it into a unicorn candidate.

Purpose: At its core, DigsConnect’s mission is to give people a sense of stability through housing. As much as jobs and education are important to the economy, people can’t work or study without a roof over their heads. The team recognises that this is harder for some than for others, and have shown a willingness to work with foundations and local governments to make it easier for those at the bottom of the economic pyramid to access affordable housing.

As an example, they recently partnered with the Michael & Susan Dell Foundation to roll out their #1000digs campaign, which saw the Foundation allocating them $200,000 to provide extra support in finding accommodation for 1000 low-income students. 

Potential: DigsConnect is astronomically far from reaching its full potential. While they are already solving a universal problem, people will need accommodation at all stages of their lives, and targeting young adults (who are making their first independent housing choice) is a great entry point to addressing their needs for decades beyond. The property and real estate industry is already massive, the population is growing, and the rate of people changing houses is increasing; opportunities aplenty, for DigsConnect.

There’s a final point to be made about DigsConnect - its users absolutely love it. When we spoke to people who had used the platform (both students and landlords), we felt a sense of trust and gratitude. Students, especially, would strongly recommend it to their friends.

There’s inherent stickiness and virality to DigsConnect’s market, provided they serve them well. Satisfied students will likely use the platform again when they move into their next place, possibly because they’ve finished studying and can afford something more spacious; and they’re likely to recommend it to those in their lives, too - their friends, their younger siblings when they enter university, and possibly even their kids, one day in the future.

As a venture ecosystem, we’ve helped DigsConnect with more than capital. We have supported and will continue to support their product development, as well as any other areas that arise as they grow. Finally, their founders will continue to benefit from the unbeatable ecosystem of fellow entrepreneurs and investors we’re curating.

If you would like to see how we can support your venture, across any dimension, no matter your stage, contact us today.

For more on how we select the startups we invest in, check out why we invested in luca, participating in its historic €30m seed round.

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