The World Economic Forum States that Africa has an average annual demand of 2.4 million cars and 300,000 commercial vehicles. This demand is increasing due to increasing disposable income across the continent, the strong growth of the middle class and rapid urbanization. But even though most of the cars meeting this demand are second-hand, car ownership in Africa remains limited. less than 45 cars per 1000 inhabitantsunlike the global average of 203 cars per 1,000 inhabitants.
We featured startups in the automotive industry, highlighting notable players like Automatic control And Move, each approaching ownership by serving consumers and drivers respectively. However, vehicle financing goes beyond consumers and drivers; there is a substantial opportunity to offer tailored services to dealers. Vehicle financing is crucial for small car dealerships because it helps them with their daily transactions and reduces costs. When credit is affordable, it also benefits customers, leading to more cars on the roads in Africa. This highlights the need for affordable financing and business solutions for automobile dealerships.
Operations in this strategic area are supported by YC Shekel Mobility. The B2B auto dealership marketplace has secured over $7 million in funding, including $3.2 million in equity and over $4 million in debt. Co-founder Benjamin Oladokun shared in an interview with TechCrunch that the funds will help quadruple the startup’s current ARR of just over $2 million and build on that momentum as it prepares for its next pricing cycle. Last January, the newcomer announced a $1.95 million pre-seed investment led by Ventures Platform with participation from Y Combinator, Voltron Capital and Zedcrest.
These investors followed Shekel Mobility’s funding round. This time, Ventures Platform co-led its funding 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, among others, provided the debt component; some leveraged Shekel Mobility’s platform to finance car dealerships, according to the startup.
Oladokun founded Shekel Mobility with Sanmi Olukanmi. Their combined expertise in the automotive industry, including the launch and release of Eazypapers Technologies, a digital vehicle documentation platform for FMCG, mobility and logistics companies, laid the foundation for Shekel Mobility .
The self-described mobility fintech helps car dealers find, finance and sell cars in Africa’s $30 billion used car market. Shekel Mobility aspires to position itself as the first platform to launch and grow an automobile dealership locally or virtually (it wants to build the largest automobile dealership ecosystem with transactions amounting to $10 billion per year by 2025). To date, the Auto Dealership Marketplace has generated transactions worth over $56 million, facilitating the growth of over 1,400 auto dealerships by increasing their inventory and sales on 7,000 cars.
At the heart of the startup’s growth is its flagship product, Shekel Credit, which provides auto dealers with immediate access to financing, with credit limits of up to $200,000 for vehicle purchases, typically between $5,000 and $20,000. The financing mechanism provides that the dealer contributes 30% of the total cost, or $3,000 in the case of a car purchase of $10,000. Shekel provides the remaining 70% as a loan to the dealer. Subsequently, upon sale of the vehicle to the end customer, usually within three months, the car dealer remits payment to Shekel, covering the loan interest and transaction fees associated with the sale of the car.
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% defect rate, Oladokun noted during the call . Olukanmi, in a statement, also pointed out that while there is a big gap in direct financing of car dealerships, Shekel Mobility only finances car dealers who “believe they will have a lasting positive impact on consumers.”
Building on its growth over the past 20 months through its credit product, Shekel Mobility is set to introduce more offers, including Business in shekel. This product, say the founders, will seek to digitize informal business processes within the car dealership vertical. The suite of tools is designed to help dealers not only finance their inventory, but also streamline sales and structuring processes. “One of the fundamental things we built is the ability to buy a car without a warranty,” Oladokun said. “We started by lending to dealerships, but now we are looking to provide additional digital tools and physical infrastructure to reduce the cost of owning a car dealership.”
Kola Aina, the founding partner of Ventures Platform, noted that Shekel is building crucial market-creating innovation that is important to the expansion of Nigeria and soon the African automotive industry. In the same vein, Marlon Nichols, Founder and Managing Partner of MaC Venture Capital, speaking at the conference, said Shekel Mobility has the potential to transform and revive the automotive industry in Africa as it finances and empowers small businesses who need financing to survive. “The team keeps millions of dollars flowing through the Nigerian economy while providing residents with affordable automobiles,” he noted.