Shekel Mobility secures $7m funding to aid Africa’s growing car market

Shekel Mobility, a smart fintech for auto dealerships has secured $7 million in funding, comprising $3.2 million in equity and over $4 million in debt. Ventures Platform, Y Combinator, Rebel Fund, Unpopular Ventures, Maiora Capital, PageOne Lab Inc., Phoenix Investment Club, Heirloom VC, Pioneer Ventures, and some other angel investors took part in the round. Zedvance, VFD Microfinance Bank, Zenith Bank, and Fluna, amongst others, provided the debt component.

Co-founder Benjamen Oladokun said this investment will significantly expand the company’s impact. According to him, the funding round is geared towards assisting car dealers in Africa.

The World Economic Forum reveals Africa’s escalating demand for 2.4 million cars and 300,000 commercial vehicles yearly due to increasing disposable income, a burgeoning middle class, and rapid urbanization.

However, despite this demand, Africa’s car ownership stands at less than 45 cars per 1000 people, a stark contrast to the global average of 203. In response, emerging startups like Autochek and Moove have addressed consumer and driver needs, yet there is a growing necessity for solutions tailored to vehicle sellers in Africa, where Shekel Mobility comes in.

Talking about the funding, the core of the startup’s growth centres around its primary offering, Shekel Credit. This service provides immediate financing to auto dealers, granting credit limits of up to $200,000 for buying vehicles, usually ranging between $5,000 to $20,000.

In this financing process, the dealer contributes 30% of the total cost, like $3,000 for a $10,000 car. Shekel covers the remaining 70% as a loan to the dealer. After selling the vehicle to the end customer, usually within three months, the dealer pays Shekel back, covering the loan interest and transaction fees linked 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 zero per cent 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.”

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Expansion beyond credit: Shekel Mobility’s innovations

Shekel Mobility, leveraging its progress over the past 20 months with its credit product, aims to launch additional services, such as Shekel Business. The founders explain that this new product aims to digitalize informal trading procedures within the auto dealership sector. This set of tools is tailored to aid dealers not just in financing their stocks but also in optimizing sales and organizational procedures.

“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 from Ventures Platform highlighted that Shekel is developing a pivotal, market-creating innovation crucial for the growth of Nigeria’s and, eventually, Africa’s automotive sector. Similarly, Marlon Nichols, founder and managing partner at MaC Venture Capital, speaking about the investment round, expressed that Shekel Mobility holds the potential to revolutionize and spark growth in Africa’s automotive industry by providing crucial financing and support to small businesses.

“The team is enabling millions of dollars to move through the Nigerian economy and simultaneously providing locals with affordable automobiles,” he mentioned.

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