The auto financing company, Moove, earlier today announced obtaining $23 million in the Series A funding rounds. According to the company, this funding would help to provide revenue-based financing to ease vehicle ownership for numerous Africans. This latest funding brings Moove’s total investment secured to $68.2 million. This includes $28.2 million in equity and $40 million in debt.
The Series A funding round was led by Speedinvest and Left Lane Capital. Other companies that got involved include DCM, Clocktower Technology Ventures, LocalGlobe, Tekton, FJ Labs, Palm Drive Capital, Roka Works, KAAF Investments, Class 5 Global, and Victoria van Lennep, co-founder of Lendable. Also involved in the funding round are Africa-focused Venture Capitalists like Verod Kepple Africa Ventures, and one of Moove’s existing lenders, Emso Asset Management. According to Moove, this investment marks the first foray into Africa for many of its U.S. VC backers, thus underscoring the opportunity for a platform like Moove to address the continent’s vehicle financing gap.
In Nigeria, owning a car is a luxury very few people can afford. It is a similar case across the rest of Africa, where car owners often recycle used cars amongst themselves because of the challenges of owning new ones. Moove, an African mobility company with a fintech approach, wants to change that narrative especially with the $23 million raised in Series A to scale rapidly across the continent.
In an interview with Ladi Delano and Jide Odunsi (Founders of Moove), they both shed light on how Moove started in 2019. Delano mentioned how he and Odunsi were left startled, whilst trying to figure out the problems to solve in Nigeria. After so much brainstorming they found a problem – Less than a million new cars were sold in an entire continent and over 17 million in the U.S. alone. Delano said “It became clear to us that people aren’t buying cars in Africa because there’s no access to finance. When you look anywhere else in the world, you have financing in most parts of the developed world when you try to buy a car.”
The founders say although it’s a huge task addressing this deficit, deploying an asset financing model was the go-to approach. The vehicle ownership model only applies to only a subset of the driving population across the continent, Moove refers to them as mobility entrepreneurs. These include drivers who work in the mobility space (car-hailing, ride-hailing, bus-hailing, among others). Although they make up a small part of Africans who need Moove’s services, Delano says the market for ‘mobility entrepreneurs’ remains enormous. Delano says inasmuch as Moove is changing how people have access to new cars in Africa, the company is solving some of the unemployment problems facing the continent.
Moove is Uber’s exclusive car financing and vehicle supply partner in sub-Saharan Africa. The company embeds its alternative credit-scoring technology, allowing access to proprietary performance and revenue analytics to underwrite loans. It provides loans to these drivers by selling them new vehicles and financing up to 95% of the purchase within five days of sign up. They can choose to pay back their loans over 24, 36, or 48 months, using a percentage of the weekly revenue generated while driving on the Uber platform. The net effective annual interest rate also differs significantly. Nigerian banks that may offer similar services charge between 20 to 25%, however, Moove plans to runs on an 8-13% rate.