African automotive company Autochek Secured $ 13.1 Million Funding Nearly A Year After Raising $ 3.4 Million Pre-Seed In November 2020.
The company, led by the CEO Etop Ikpe, has seen an astonishing growth in demand since its launch in August of last year, and not only from the point of view of the consumer but also of its commercial and banking partners. And who else to lead the seed round other than pan-African venture capitalists TLcom Capital and 4DX Ventures – the same investors who believed they were leading the startup’s pre-seed round.
Other existing investors, such as Golden Palm Investments, Enza Capital and Lateral Capital, have also invested. First time investors ASK Capital and Mobility 54 Investment SAS, the venture capital arm of Toyota Tsusho and the CFAO group, also participated. In total, Autochek raised $ 16.5 million in two rounds of funding.
When Ikpe spoke to TechCrunch last month, the company had only finalized the acquisition of Cheki’s activities in Kenya and Uganda from Ringier One Africa Media (ROAM). The deal was reached almost a year after Autochek bought Cheki Ghana and Cheki Nigeria to start business.
Although acquisitions have so far been the company’s entire expansion strategy, it has not taken this route in CÃ´te d’Ivoire – it has partnered with the CFAO group to bring its place of market in the French-speaking region.
The expansion brings the number of African markets in which Autochek operates to five. The used car market in Africa is a $ 45 billion industry, where the vehicle penetration rate stands at a meager 5%. And because the market lacks transparency, lenders (above all banks) have found it difficult to provide loans to individuals, commercial drivers or motorists.
Autochek’s platform operates a market-driven model with an emphasis on finance and aftermarket. Its main clients? Dealers, banks and end consumers (those who buy cars on the platform).
When a dealership registers on the platform, Autochek assigns it a workshop to start inspections on vehicles belonging to the dealership. The evaluations and some algorithmic checks on the Autochek system help to give an idea of ââthe condition and condition of the car, determine if it is in a state of be funded.
âThis is the big risk for the banks because they don’t want a situation where they finance a car and the next day the engine knocks,â Ikpe said of why Autochek is going through these processes.
After inspection, Autochek alerts all banks on its platform that the vehicle is ready to be funded and move it to the market. After careful consideration, the banks respond with their offers. TThe end user then has a pool of finance rates from banks to choose from and can request the purchase of the car once Autochek has developed a credit profile.. The loan application process takes around 48 hours, compared to 40 to 45 days in the industry.
Once sorted, Autochek supports the banks in the disbursement and ensures that the vehicle is saved, insured and follow-up. Then the car is brought into Autochek’s after-sales network, where it is serviced free of charge whenever mechanical problems arise..
Autochek makes money by charging fees to customers and banks after successful disbursement and dealer commissions.
“Were not only there for banks and customers at the point of disbursement; we stay with them throughout the life cycle of the loan, âsaid Ikpe. âWe’ve built this ecosystem using technology to bring all of these different verticals together so that at the end of the day we can create more value with funding being our primary driver within the platform.â
Last year, when Autochek announced its pre-seed round, it had 12 banking partnerships. That number has grown to around 70 banks, such as Access Bank, Ecobank, UBA, Bank of Africa, and NCBA Bank. These banks have processed over 46,000 loan applications to date; this number was only November 10, the company declared.
Initially, Autochek only worked with used cars. But the company has since launched a finance product for trucks and new cars. More than 1,200 dealers use the Autochek network and more than 15,000 fundable vehicles are on the market in all markets.
Ikpe says the introduction of these new verticals came at the request of its partner banks, which have been integral in establishing the company on the continent.
But in some cases, despite apparent demand and the presence of a partner bank, Ikpe says Autochek refused to enter new markets where it saw no potential at the time.
Presently Based in West and East Africa, Autochek targets the north and south of the continent – Egypt and South Africa to be precise.
âWe are talking to a few partners around potentially how we can make the entrance and I think between now and Probably By the second quarter of next year, we would sort of have identified the best type of product-market suitable for those markets. But we expect that by the third quarter, we will be present in these markets, âsaid Ikpe, who was previously co-founder and general manager of the Jiji Cars subsidiary45. starting Autochek.
Ikpe’s dynamism and experience and Autochek’s lightning growth are at the top of the list of reasons TLcom Capital has reinvested in the company created a year ago, according to partner Andreata Muforo. For Walter Baddoo, Managing Partner at 4DX Ventures, says the team has demonstrated “the talent, ambition and domain expertise to create a complete end-to-end ownership experience for clients.”
In Africa, Uber and Bolt dominate the ridesharing space, leading most mobility startups to tackle vehicle finance and logistics issues instead.
Autochek and other vehicle finance startups like Moove and FlexClub have raised significant sums of money, signifying growing investor interest in the space and a maturing competitive landscape.
In the case of Autochek, investor interest was such that Autochek closed at twice what it had originally planned to raise. Frankly, for a company that deals with automotive technology in Africa, that says a lot. But then again, Autochek has a fintech element with its funding model. So its big seed round is not a big surprise, considering how fintech dominates the African venture capital landscape and holds the record for highest startup investments from PalmPay, Kuda and PawaPay.
Like any startup, Autochek wants to be a market leader. It plans to inject new capital into strengthening its auto loan processing platform, deepen its presence in West Africa and, ultimately, Leverage Toyota Tsusho’s extensive retail network in 54 African countries to deepen its expansion.