TLcom and 4DX drive $13.1M seed round to scale Autochek’s platform across Africa – TechCrunch


African automotive firm Autochek has secured a $13.1 million seed round virtually a 12 months after raising $3.4 million pre-seed in November 2020.

The firm, led by CEO Etop Ikpe, has seen astonishing development in demand since launching in August final 12 months, not simply from a client perspective but additionally from its enterprise and banking companions. And who else to lead the seed round aside from pan-African VC corporations TLcom Capital and 4DX Ventures — the identical traders that had the conviction to lead the startup’s pre-seed round.

Other present traders, akin to Golden Palm Investments, Enza Capital and Lateral Capital, invested as effectively. First-time traders ASK Capital and Mobility 54 Investment SAS, the enterprise capital arm of Toyota Tsusho and CFAO Group, additionally participated. In complete, Autochek has raised $16.5 million in two financing rounds.

When Ikpe spoke to W3Techy final month, the corporate had simply finalized the acquisition of Cheki’s companies in Kenya and Uganda from Ringier One Africa Media (ROAM). The deal closed virtually a 12 months after Autochek purchased Cheki Ghana and Cheki Nigeria to begin its enterprise.  

Although acquisitions have made up all the corporate’s growth technique to this level, it didn’t take that route into the Ivory Coast — it partnered with CFAO Group to convey its market to the Francophone area.

The growth takes the variety of African markets during which Autochek is current to 5. Africa’s used automotive market is a $45 billion business, the place the car penetration charge stands at a meager 5%. And as a result of the market lacks transparency, lenders (primarily banks) have discovered it difficult to provide loans to people, industrial or ride-hailing drivers.

Autochek’s platform operates a marketplace-driven mannequin with a concentrate on financing and after-sales. Its major clients? Dealerships, banks and the tip shoppers (those that purchase automobiles on the platform).

When a dealership indicators up on the platform, Autochek assigns a workshop to begin inspections on the automobiles owned by the dealership. The assessments and some algorithmic checks on Autochek’s system assist to give a way of the standing and situation of the automotive, figuring out whether or not it’s in a state to be financed.

“That’s the big risk for the banks because they do not want a situation where they finance a car and the next day, the engine knocks,” stated Ikpe explaining why Autochek goes via these processes.

After inspection, Autochek alerts all of the banks on its platform that the car is prepared to be financed and strikes it to {the marketplace}.  Following an intensive evaluation, the banks reply with their provides. The end-user then has a pool of financing charges from the banks to select from and can apply to purchase the automotive after Autochek develops a credit score profile. The mortgage software course of takes about 48 hours, down from an business commonplace of 40-45 days.

Once sorted, Autochek helps the banks in disbursement and making certain that the car is registered, insured and tracked. Then the automotive will get fed into Autochek’s after-sales community, the place it will get maintained without spending a dime every time mechanical points come up

Autochek makes cash by charging clients and banks a charge after a profitable disbursement and commissions from dealerships.

“We’re not just there for the banks and customers at the point of disbursal; we stay with them throughout the lifecycle of the loan,” stated Ikpe. “We’ve built that ecosystem using technology to stitch all these various verticals together so that at the end of the day, we can create more value with financing being our core driver within the platform.”

Last 12 months when Autochek introduced its pre-seed round, it had 12 financial institution partnerships. That quantity has elevated to about 70 banks, akin to Access Bank, Ecobank, UBA, Bank of Africa and NCBA Bank. These banks have processed greater than 46,000 mortgage purposes to date; this quantity was simply 10 final November, the corporate stated.

Initially, Autochek labored with solely used automobiles. But the corporate has since launched a financing product for vehicles and new automobiles. More than 1,200 dealerships use Autochek’s community and over 15,000 financeable automobiles are on {the marketplace} across all markets.

Ikpe asserts that introducing these new verticals got here from the demand from its associate banks, who’ve been integral to the place the corporate units up store on the continent.

But in some circumstances, regardless of seeming demand and the presence of a associate financial institution, Ikpe says Autochek has declined to transfer into new markets the place it didn’t understand potential at that second.


The Autochek crew

Presently settled in West and East Africa, Autochek has its sights set northward and southward on the continent — Egypt and South Africa to be exact.

“We are speaking to a few partners around potentially how we can make entry and I think between now and probably Q2 next year, we would have kind of identified the best kind of product-market fit for those markets. But we expect that by Q3, we should have a presence in those markets,” stated Ikpe, who was the co-founder and chief govt at Jiji subsidiary Cars45 earlier than starting Autochek.

Ikpe’s drive and expertise and Autochek’s blitzscaling development are high of the checklist on why TLcom Capital re-invested within the one-year-old firm, in accordance to associate Andreata Muforo. For Walter Baddoo, managing associate at 4DX Ventures, it’s that the crew has demonstrated “the talent, ambition, and domain expertise needed to build a complete end-to-end car ownership experience for customers.”

In Africa, Uber and Bolt dominate the ride-hailing area, main most mobility startups to deal with car financing and logistics issues as an alternative.

Autochek and different car financing startups like Moove and FlexClub have raised massive sums of cash, signifying rising investor pursuits within the area and a maturing aggressive panorama.

In Autochek’s case, traders’ curiosity was such that Autochek closed at twice what it initially supposed to elevate. Frankly, for a enterprise that offers with automotive tech in Africa, that speaks volumes. But then once more, Autochek has a fintech factor with its financing mannequin. So, its massive seed round doesn’t come as an enormous shock, contemplating how fintech dominates the African VC landscape and holds the document for the best seed-stage investments from PalmPay, Kuda and PawaPay.

Like any startup, Autochek needs to be a market chief. It plans to inject the brand new capital into bolstering its auto mortgage processing platform, deepen its footprint in West Africa and, in the end, leverage Toyota Tsusho’s huge retail community across 54 African nations to deepen its growth additional.