More than a billion people reside in Africa, a place where there is limited or no access to vehicle financing for the majority of its population. It is also a place where the high rate of poverty has made car ownership a luxury for most of the population. In 2019, the continent had fewer than 900,000 new vehicle sales compared to 17 million recorded by the U.S. In the same year.
Due to poor credit penetration, more than a billion people can not afford to buy new vehicles. Only 5 percent of vehicles purchased on the continent are financed, compared to the 92 percent in Europe. In Africa, Car ownership is under 44 vehicles per 1,000 people, while it is 640 per 1,000 in Europe. This dilemma has made asset finance quite popular across Africa with different startups changing the structure of automobile asset ownership. For example, there is Flexclub in South Africa that provides financing for electric cars and motorcycles, Asaak in East Africa, which recently partnered with Untapped Global to finance 2000 motorbikes for Ugandan riders, and also raised $30 million pre-series A. In Nigeria, there is MaxNG, which has just partnered with Bolt to provide motorcycle financing for its riders, and Moove whose biggest market is also Nigeria. Moove is looking to provide a long-term fix through vehicle financing for those who can make money off owning cars as gig drivers. Moove describes them as mobility entrepreneurs. Essentially Moove deals with new cars as a flexible option for drivers who want to get into the business of ride-hailing but do not want to borrow from car owners or take bank loans to finance cars bought from dealerships.
The mobility startup has raised $105 million in new Series A2 funding round. This latest fundraising round came almost 7 months after Moove’s $23 million Series A in August 2021, a month after a $10 million debt financing round (February 2022), and seed-stage funding from Future Africa in 2019, bringing the total investments raised by the startup to $174.5 million.
According to Moove, Series A2 is a new priced round consisting primarily of existing investors, with three new investors joining. The $105m is entirely fresh capital to the business. Co-founded in 2019 by Ladi Delano and Jide Odunsi, the startup offers mobility entrepreneurs easy access to revenue-based financing in markets where there is low access to credits.
The co-founders who are both British-born Nigerians, alumni of the London School of Economics, Oxford University, and MIT, have also launched three other businesses in Africa before Moove. Their Existing investors Speedinvest and Left Lane Capital led the seed round and shared between $65 million equity and $40 million debt with participation from the latest ventures. New investors such as AfricInvest, MUFG Innovation Partners, Latitude, and Kreos Capital also participated. The startup which formally launched in 2020 is now present in six African cities: Lagos, Accra, Johannesburg, Cape Town, Nairobi, and Ibadan.
Typically, the startup sells new vehicles to its customers and finances 95% of the purchase within five days of request. After a request has been approved, customers can then choose the time they will pay back which could spread within 24, 36, or 48 months, using a percentage of the weekly revenue generated while driving on Uber. The idea is that customers can buy new vehicles through Moove’s alternative credit scoring technology of using a percentage of their weekly revenue. Moove has enabled over 3 million trips in Moove-financed vehicles covering 25 million kilometres across Africa, launched in six cities, and connected thousands of mobility entrepreneurs to marketplaces. This is an impressive feat From the 850,000 trips completed when it closed its Series A in August 2021.
Despite these achievements, there are still millions of budding entrepreneurs who have limited or no access to vehicle financing. This is why Moove plans to use the new investment to expand its vehicle financing model to 7 new markets across Asia, the Middle East and North Africa (MENA), and Europe over the next six months, to “meet the needs of mobility entrepreneurs in other emerging markets.
The mobility sector in emerging economies like Africa is facing challenges due to its highly fragmented and informal nature as well as insufficient purchasing power among middle-class citizens and limited or no access to vehicle financing. This often put cars out of reach for the majority of the population in these countries. With its revenue-based financing model, Moove is addressing this problem albeit for a segment of the population: mobility entrepreneurs. In addition to its global scaling plans, the startup will also expand its partnerships and vehicle classes to include cars, trucks, bikes, three-wheelers, and buses.
Featured Image Source: Business AM LiveGot a suggestion? Contact us: editor@connectnigeria.com