Nigerian car platform Autochek is starting life with a silver spoon. In September, a month before it was officially launched, it announced it was acquiring ROAM Africa (Ringier One Africa Media)’s car marketplaces Cheki Nigeria and Cheki Ghana, to build a seamless and safe automotive commerce experience across Africa, starting with Nigeria and Ghana. And yet, one month after that acquisition deal was sealed, Autochek is back to the deal table, this time securing $3.4m in seed funding, from VC fund TLcom Capital and and the US-based 4DX ventures.
“The used car market in Africa is a $45 billion a year market that has only a 5% financing penetration rate…so there’s huge upside for growth,” said CEO Etop Ikpe.
Here Is What You Need To Know
- Also joining this investment round are Golden Palm Investments, Lateral Capital, MSA Capital, and Kepple Africa Ventures.
- The latest investment comes two months after the startup acquired digital car sales marketplace Cheki in Nigeria and Ghana.
- It also follows the recent departure of Autochek CEO Etop Ikpe from Cars45 — the startup he co-founded in 2016, now owned by Amsterdam based OLX Group.
- Added to its operations in Nigeria, Autochek will use its seed-financing to expand services and geographic scope. It also plans to add associated auto related services, such as insurance and blue book pricing products. The startup is also eying possible entry in new countries such as Ivory Coast, Senegal, South Africa, Kenya, Egypt and Algeria. More M&A could also be in play. “Acquisitions are going to be a core part of our expansion strategy,” said Ikpe.
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Why The Investors Invested
There seems to be a lot of reasons why TLcom Capital settled for the startup. Last year, the fund’s managing partner, Maurizio Caio, hinted that TLcom was steering more toward investments in infrastructure oriented tech companies and away from Africa’s more commoditized payments and lending startups.
According to TLcom Capital Partner Andreata Muforo Autochek’s asset light model, Ikpe’s repeat founder status, and the fund’s view of auto sales and service as an underserved market in Africa are reasons for backing the venture.
Based in Accra Ghana, Golden Palm Investments invests in diverse sectors including healthcare, real estate, financial services, agribusiness and technology. The fund’s portfolio includes investments in Andela, Flutterwave, Ajua, etc.
Founded in 2011, Beijing, China-based MSA Capital is a global venture capital firm with $1.5 billion under management, investing from seed to growth. Other VCs, Lateral Capital and Kepple Africa Ventures are equally active VC funds operating on the continent.
While fintech recieves the majority of VC financing across Africa’s top tech hubs — such as Nigeria, Kenya and South Africa — mobility related startups operating on the continent have attracted notable support. Trucking logistics company Kobo360 has received backing from Goldman Sachs. In 2019, FlexClub, a South African startup that matches investors and drivers to cars for ride-hailing services, raised a $1.3 million round to expand to Mexico in partnership with Uber.
A Look At What Autochek Does
Launched in October, 2020 and managed by a developer team in Lagos and Nairobi, Autochek is a network for consumers and businesses to buy cars, sell cars, service cars, and finance cars sales. The startup was founded by former Cars45 chief executive officer (CEO) Etop Ikpe. Autochek’s model, according to its CEO, is aimed at creating the digital infrastructure for a new system to better coordinate sales, servicing, and vehicle records of the car market in Nigeria and broader Africa.
“It’s different in the type of technology we’re building and that it’s asset light. I don’t have any inventory. I don’t buy cars. I don’t transact any [physical] cars. I don’t own any inspection locations. I don’t own any dealerships,” Ikpe said in an interview.
The company generates revenues through fees charged on consumer transactions and commissions paid by dealers and service shops on the platform. Consumers can sign up and use the Autochek app for free.
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