The World Economic Forum states that Africa has an average annual demand for 2.4 million cars and 300,000 commercial vehicles. This demand is increasing because of a continent-wide increase in disposable income, strong middle-class growth and rapid urbanization. But while most cars meeting this demand are used, car ownership in Africa is less than 45 cars per 1,000 people, in contrast to the global average of 203 cars per 1,000 people.
We’ve featured automotive industry startups, spotlighting notable players like Autochek and Moove, each addressing ownership by serving consumers and drivers, respectively. However, vehicle financing extends beyond the purview of consumers and drivers; a substantial opportunity exists to offer services tailored for dealers. Vehicle financing is crucial for small car dealers as it helps them with daily transactions and keeps costs down. When credit is affordable, it benefits customers, too, leading to more cars on the road in Africa. This highlights the need for affordable financing and business solutions for car dealers.
Operating within this strategic domain is YC-backed Shekel Mobility. The B2B auto dealers marketplace has secured over $7 million in funding, comprising $3.2 million in equity and over $4 million in debt. Co-founder Benjamen Oladokun shared in an interview with TechCrunch that the funds will be instrumental in quadrupling the startup’s current ARR of slightly over $2 million and leveraging this momentum as it gears up for its next priced round. Just this January, the upstart announced a $1.95 million pre-seed investment led by Ventures Platform with participation from Y Combinator, Voltron Capital and Zedcrest.
These investors followed on in Shekel Mobility’s seed round. This time, Ventures Platform co-led its seed round alongside MaC Venture Capital. Other investors include Y Combinator, Rebel Fund, Unpopular Ventures, Maiora Capital, PageOne Lab Inc., Phoenix Investment Club, Heirloom VC, Pioneer Ventures and other angel investors. Meanwhile, Zedvance, VFD Microfinance Bank, Zenith Bank and Fluna, amongst others, provided the debt component; some have leveraged Shekel Mobility’s platform to finance auto dealerships, according to the startup.
Oladokun founded Shekel Mobility with Sanmi Olukanmi. Their combined expertise in the automotive industry, including the launch and exit of Eazypapers Technologies, a digital vehicle documentation platform catering to FMCG, mobility and logistics companies, laid the groundwork for Shekel Mobility.
The self-described mobility fintech helps car dealers find, finance and sell cars in the $30 billion African used car market. Shekel Mobility aspires to position itself as the premier platform to launch and grow a car dealership locally or virtually (it wants to build the largest auto dealership ecosystem with transactions amounting to $10 billion annually by 2025). To date, the auto dealer marketplace has powered transactions worth over $56 million, facilitating the growth of over 1,400 auto dealers by augmenting their inventories and sales across 7,000 cars.
At the heart of the startup’s growth is its flagship product, Shekel Credit, which offers auto dealers immediate access to financing, with credit limits extending up to $200,000 for vehicle purchases, typically falling within the $5,000 to $20,000 range. The financing mechanism involves the dealer contributing 30% of the total cost, amounting to $3,000 in the case of a $10,000 car purchase. Shekel provides the remaining 70% as a loan to the dealer. Subsequently, upon the sale of the vehicle to the end customer, usually within a three-month time frame, the auto dealer remits payment to Shekel, covering interest on the loan and transaction fees associated with the car sale.
This model, in which Shekel Mobility controls the end-to-end process of buying and selling cars through dealerships, ensures that it records a 0% default rate, Oladokun noted on the call. Olukanmi, in a statement, also highlighted that while there’s a big gap in providing financing directly to auto dealers, Shekel Mobility only finances auto dealers it “believes will have a lasting positive impact on the consumers.”
Building on its growth in the last 20 months through its credit product, Shekel Mobility is set to introduce more offerings, including Shekel Business. This product, the founders say, will look to digitize the informal trading processes within the auto dealership vertical. The suite of tools is designed to assist dealers not only in financing their inventories but also in streamlining sales and structuring processes. “One of the fundamental things we’ve built is the ability to buy a car without collateral,” Oladokun said. “We started out lending to dealers, but now we’re looking to provide additional digital tools and physical infrastructure to reduce the cost of owning car dealerships.”
Kola Aina, the founding partner at Ventures Platform, noted that Shekel is building a crucial market-creating innovation that is important to expanding Nigeria and soon Africa’s automotive industry. In the same vein, Marlon Nichols, founder and managing partner at MaC Venture Capital, speaking on the round, said Shekel Mobility has the potential to transform and ignite the automotive industry in Africa as it finances and empowers small businesses that require financing to survive. “The team is enabling millions of dollars to move through the Nigerian economy and simultaneously providing locals with affordable automobiles,” he noted.