{"id":339728,"date":"2017-05-01T15:30:40","date_gmt":"2017-05-01T07:30:40","guid":{"rendered":"http:\/\/techcrunch.com\/?p=1483520"},"modified":"2017-05-01T15:30:40","modified_gmt":"2017-05-01T07:30:40","slug":"nigerias-cars45-closes-5m-round-to-digitize-africas-used-autos-markets","status":"publish","type":"post","link":"https:\/\/people.utm.my\/asmawisham\/nigerias-cars45-closes-5m-round-to-digitize-africas-used-autos-markets\/","title":{"rendered":"Nigeria\u2019s Cars45 closes $5M round to digitize Africa\u2019s used autos markets"},"content":{"rendered":"

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Jake Bright<\/span> Contributor<\/span><\/p>\n<\/p><\/div>\n

Jake Bright<\/a> is a writer and author in New York City. He is co-author of The Next Africa<\/a>.<\/p>\n

More posts by this contributor:\n<\/div>\n<\/div>\n

Africa\u2019s startup boom is moving into the used-vehicle space. Nigeria based Cars45.com<\/a> raised a $5 million Series A round from the Frontier Cars Group<\/a>, a holding company whose backers include Balderton Capital<\/a>, \u00a0EchoVC<\/a>, TPG Growth, and NEA<\/a>.<\/p>\n

Cars45 will deploy the capital to improve its platform that buys, sells, prices, and rates the condition of pre-owned autos.<\/p>\n

\u201cThe used-car market in Nigeria is generally a big hassle. There\u2019s so much mistrust, no vehicle history, and not much of a structured dealer network,\u201d said Cars45 CEO Etop Ikpe. \u201cWe\u2019ve created something that changes all that, offering transparency, speed, convenience, and safety, in a highly frictional and opaque market.\u201d<\/p>\n

The Cars45 process<\/a> begins online, where owners enter their vehicle information for a free quote. They can then schedule an appointment at one of the company\u2019s 13 inspection centers in Nigeria.<\/p>\n

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After a multi-point evaluation including engine, brakes, tires, and a road-test, Cars45 makes an offer. If accepted, the company commits to wire payment to the owner\u2019s bank account within 45 minutes.<\/p>\n

After pricing and creating a digital service history, Cars45 offers the autos it acquires to a private network of buyers, according to Ikpe. The startup\u2019s revenue model\u2015for the moment\u2015is largely based on \u201cfees from that private network of pre-verified buyers\u201d who gain access to Cars45 vehicles, he said.<\/p>\n

Ikpe underscored the potential for the platform to build out other revenue streams around Nigeria\u2019s used car market, including inspection services, financing, and online auto research akin to Kelly\u2019s Bluebook<\/a>.<\/p>\n

Ikpe co-founded Cars45 in 2016 with Iyamu Mohammed, Sujay Tyle, and Peter Lindholm. The team\u2019s background spans startup experience in Africa, Europe, and Silicon Valley. Ikpe was an MD at Nigerian e-commerce startup DealDey and Mohammed Head of Operations at African used car site Carmudi (now JumiaCar<\/a>). Tyle was a COO at Hired.com and Lindholm did stints at mobile operator Millicom and Swedish fashion site Nelly.com.<\/p>\n

Though Ikpe would not divulge Cars45 value, volume, or revenue statistics, he said the venture has been actively buying and selling cars since launching, evidenced by customer Instagram shots.<\/p>\n

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The average used car cost in Nigeria is around $5K to $7K, according Ikpe.<\/p>\n

Cars45\u2019s Series A funding comes as Nigeria has become a magnet for startup activity and VC in Africa, despite being in a recession. The country, which boasts the continent\u2019s largest economy and population, produced Africa\u2019s first startup unicorn in 2016 when a $326 million funding round gave e-commerce venture Jumia a $1 billion valuation<\/a>.<\/p>\n

Nigeria also delivered one of the continent\u2019s rare tech exits with Swiss Ringier\u2019s 2016 DealDay<\/a> acquisition and attracted Mark Zuckerberg<\/a> to tour its Yaba startup district.<\/p>\n

As Africa\u2019s internet, mobile<\/a>, and tablet penetration increase, startups are adapting digital business models to multiple facets of its largely informal economic space. Many IT ventures, such as Cars45, Jumia, and MallforAfrica<\/a>, are pursuing Nigeria-first growth strategies before expanding to other markets. McKinsey Consulting projects Africa\u2019s annual consumer spending will reach $2 trillion by 2020<\/a>\u00a0and online sales\u00a0$75 billion by 2025<\/a>.<\/p>\n

Data on Africa\u2019s relatively small auto-industry indicate this spending could continue to favor used cars, which make up 90 percent of Nigeria\u2019s fleet. A 2016 study by Deloitte Consulting<\/a> reported that in 2015 only 1.5 million new vehicles were registered across the continent\u2019s 1 billion plus people. It listed the high cost of new cars in Africa as the main reason \u201csecond-hand vehicles dominate the continent\u2019s automotive retail sector.\u201d<\/p>\n

Investor Eghosa Omoigui of EchoVC\u00a0views Cars45 as a platform \u201cto bring better information, trust, and liquidity\u201d to Africa\u2019s used car markets. \u201cWe\u00a0felt it was one of those classic\u00a0startup models that\u00a0brings\u00a0offline online\u00a0and\u00a0delivers technology into a very analog business market\u00a0to create real scale.\u201d<\/p>\n

Cars45 CEO Etop Ikpe sees that scale occurring beyond in Nigeria and beyond. \u201cWe believe the opportunities are there to expand into other African cities with high vehicle sales traffic\u2026and to operate similar models in emerging markets,\u201d he said. \u201cThat\u2019s still long down the line, but once the right time comes we\u2019ll definitely go for it.\u201d<\/p>\n

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\"\" Africa’s startup boom is moving into the used-vehicle space. Nigeria based Cars45.com raised a $5 million Series A round from the Frontier Cars Group, a holding company whose backers include Balderton Capital, \u00a0EchoVC, TPG Growth, and NEA. Cars45 will deploy the capital to improve its platform that buys, sells, prices, and rates the condition of pre-owned autos. “The used-car… Read More<\/a><\/p>\n

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