Mecho Autotech gets $2.15M to expand vehicle maintenance and repair services in Nigeria

Nigeria has more than 12 million registered vehicles, and approximately 90% of them are used cars that need frequent checkups to prevent recurring breakdowns.

Given this number, one would expect effective vehicle maintenance to be standard in Nigeria. But that’s not the case: Most of the service providers in the country, usually auto mechanics, are inadequately trained and lack the needed tools to provide consistent, quality service.

A couple of startups like Y Combinator-backed Mecho Autotech are beginning to digitize this process. The company which connects car owners with quality vehicle repair and maintenance providers has raised a $2.15 million seed round. 

The company, in a statement, said it will use the capital “to expand its multi-channel service capacity, engineering team, and marketing budget for B2C acquisition.”

In Nigeria, retail customers typically have three options for making vehicle repairs: use original equipment manufacturer (OEM) mechanics, semi-organized or aftermarket mechanics, or roadside mechanics. There are very few OEM mechanics, such as Elizade and Toyota. They provide quality but expensive services because car parts are manufactured in-house. On the other hand, the services of the aftermarket and roadside mechanics are pretty affordable to most vehicle owners, though quality varies; most times, it tilts to the flawed end.

Founded by Olusegun Owoade and Ayoola Akinkunmi, Mecho Autotech has created a network of vetted in-house and third-party mechanics with the customer affordability (of businesses and retail customers) in mind, Owoade told TechCrunch. “So what we did was create a network of vetted technicians across 35 states out in Nigeria to tackle the poor vehicle maintenance culture in Nigeria,” he said.

“We also created an insurance plan because we know that motor insurance is compulsory. So if we have an insurance plan that has an annual maintenance plan embedded, it’s more or less substituting this for the after-sales package people with brand new vehicles typically get.”

After-sales packages are automated maintenance plans for new cars. But in a country where most people buy used cars and hit the road with little or no regard to servicing — which causes repair and safety issues in the long run — Mecho Autotech’s proposition is appealing.

Owoade, a consultant for most of his professional career, noticed this problem during his time with pan-African trucking company Kobo360 as chief risk officer. There, he created a platform to track incidents, including law enforcement stops, arrests and accidents. But from data Owoade compiled, over 90% of incidents reported on the platform were due to mechanical breakdown.

“I became highly interested in the problem trying to understand why, and then I narrowed that down to three key things: quality of mechanics drivers engaged, poor vehicle maintenance culture, and quality of spare parts. Repairs that are supposed to take a few days would take weeks to complete.”

He reached out to Akinkunmi, who has 10 years of experience as an automobile engineer and ran a Lagos-based vehicle maintenance outfit, to start Mecho. They started working on the project in 2019 but didn’t fully launch until April 2021. The company got into YC Summer 2021 batch and currently works with 40 business-to-business customers that own over 20,000 vehicles. It has serviced over 2,000 of these vehicles.

Owoade said that Mecho Autotech decided to work with business clients first because it gave the company time to fine-tune its service. He stated that these clients, who own large fleets, typically engage with several workshops and spend over $30 million on yearly vehicle repairs and maintenance. But with Mecho Autotech, they get to deal with one single entity that coordinates these workshops for them.

To date, the company has onboarded over 7,000 third-party mechanics across three workshops in Lagos servicing B2B customers: Shuttlers, Moove, Tolaram Group and Kobo. It charges about 15% commission fees –10% from service charges and 5% from spare parts charges.

The company said it is developing a spare parts value chain that has already served over 100 third-party mechanics and several large ticket inventory purchases for B2B customers.

Part of the seed money would go into expanding this capacity. It will also help scale Mecho Autotech’s mobile application, which it launched for its B2C customers last month. The two-year-old startup said it aims to reach 25,000 customers this year and charge them a monthly, quarterly or annual subscription fee.

To reach this scale, the chief executive said his company has a success-based arrangement on the Google Play Store where it’ll employ a pay-per-download model in exchange for the platform pushing Mecho’s app. Another strategy is to use mobile services to meet retail customers at their location if they opt not to go to a Mecho Autotech workshop or partner garages.

“With B2B, what is required is a good network of workshops that has the capacity to take care of their needs. And then for B2C, it is mobile. Consumers want convenience and so mobile services works perfectly fine for them,” he said.

“What we’ve done with mobile is that we’ve created subscription-based plans for things customers would typically do with their vehicles like the routine oil change, oil filters, brake pads and [then] send our mechanics to their preferred location in our branded minibus when need be. This is how we are trying to structure our supply base tailored towards B2B and the B2C side of the business.”

The company said its round was “oversubscribed by over 300%” and claims to be the largest investment to date for a vehicle maintenance startup in sub-Saharan Africa, which is mainly because Mecho Autotech plays in a niche market with relatively few competitors. However, one that comes to mind is Autochek, whose vehicle maintenance services are just one aspect of its all-encompassing automotive business.

Investors involved in Mecho’s seed round include Future Africa, HoaQ Capital, Cathexis Ventures, V8 Capital, Silver Squid and Tekedia Capital.

African tech took center stage in 2021

Two years ago, the African tech ecosystem saw newfound attention from global players that translated to the continent’s best year of receiving venture capital. From varying sources, it is estimated up to $2 billion went into African tech startups in 2019.

With high-profile visits from the most famous Jacks (Ma and Dorsey), a long-awaited first IPO by e-commerce giant Jumia and massive $100 million rounds, it was a sign of things to come for African tech.

But two months into 2020, the pandemic did an excellent job of lowering expectations as investment activities from local and international investors slowed down.

It wasn’t a bad year, though. African startups nearly raised $1.5 billion and saw a couple of fascinating exits: Stripe-Paystack and WorldRemit-Sendwave.

Entering 2021, the bullishness of African tech stakeholders returned — and why not? As businesses reopened globally and the pandemic drove people to adopt new habits in e-commerce, work, spending money, online delivery, and learning, venture capital into various industries was poised to increase immensely, and Africa would not be exempt.

Predictions were made on how much the continent’s startups would raise in December. AfricArena, a tech ecosystem accelerator, pegged deals to close between $2.25 billion and $2.8 billion. Stephen Deng, the co-founder and partner of DFS Lab, a firm that invests in digital commerce startups, serially compared the 2016 Southeast Asia funding landscape to where Africa might be in 2021, at $3 billion.

These predictions weren’t entirely off the mark. In the end, information from the likes of Maxime Bayen and Briter Bridges made 2019 numbers look like child’s play. 2021 was when African tech reached an inflection point and took center stage as companies raised over $4 billion (more than they got in 2019 and 2020 combined).

From minting five unicorns to witnessing more million-dollar raises by female CEOs, we spotlight some of the events that shaped this pivotal moment in African tech.

What’s a record year of funding without some unicorns?

Attaining unicorn status — a privately held company with a valuation of $1 billion — is undoubtedly one of the vainest achievements for any startup, yet it remains the most coveted.

In Africa, the first two unicorns were Jumia (in 2016) and fintech giant Interswitch (in 2019). As Jumia went public on the NYSE in 2019, it ceased to be a unicorn and became a typical billion-dollar publicly held company.

It’s a similar case with Egyptian payments company Fawry. It went public on the Egyptian stock market (the first indigenous tech company to do so on African soil) in 2019. However, unlike Jumia, Fawry only reached a billion-dollar valuation a year after going public. So, it isn’t and technically wasn’t a unicorn.

Interswitch was the continent’s sole unicorn until five more were minted this year. Four are fintechs: Flutterwave, OPay, Wave and Chipper Cash, while one is tech talent marketplace Andela.

Flutterwave got its horn in March at $1 billion; OPay in August at $2 billion; Wave and Andela the following month, at $1.7 billion and $1.5 billion, respectively; Andela in September raised at a $1.5 billion valuation; Chipper Cash in November at $2 billion. Meanwhile, Interswitch, the sole unicorn between 2019 and 2021, is worth $1 billion.

A couple of reasons are behind this sudden surge in unicorn numbers on the continent. More experienced founders exist and specific markets, particularly in the Big Four (Nigeria, South Africa, Egypt and Kenya), show a mix of matured but still open-for-disruption traits.

Also, sectors such as fintech keep opening up in ways never seen before and there’s a rush of foreign money from first-time investors in early and later stages, simultaneously.

International investors participated from pre-seed to Series E stages

While global investors have previously invested in African startups, their activity seemed more prominent in 2021, probably because of their participation across the board.

For instance, investors such as Berlin-based VC firm Target Global and renowned investment firm and hedge fund Tiger Global cut checks across early and growth stages.

Target invested in both Series A rounds of Kuda and Mono (including the Series B round of the former). The European VC also led the pre-seed rounds of Kippa and Edukoya. On the other hand, Tiger led Union54’s seed round, Mono’s Series A and later rounds in FairMoney and Flutterwave.

Other deals where growth firms participated in early and growth stages included Sequoia in Telda’s pre-seed; Wave’s Series A, via stealthy wealth management fund Sequoia Heritage; and OPay’s Series C, via its subsidiary fund Sequoia Capital China.   

There was also action from other investors, such as Dragoneer, FTX, Fidelity, SVB Capital and Sam Altman, who got involved in single large deals for the first time. It was routine for other firms like Tencent as it invested in the growth rounds of uLesson, Ozow and TymeBank– and SoftBank, who, via its Vision Fund 2, led two of the continent’s many nine-figure rounds in 2021: unicorns Andela and OPay.

African startups raised more $100M+ rounds this year than ever before

OPay had one of the three nine-figure deals in 2019 after raising a $120 million Series B round. Others included Andela’s $100 million and Interswitch’s $200 million deals. So imagine the surprise the following year when no nine-figure deal took place (just as the continent didn’t produce any unicorn).

The draught didn’t last long, as Africa not only had its highest unicorn year but also recorded the most nine-figure rounds (11 from 10 startups) in a single year.

Let’s start with the unicorns: Flutterwave’s Series C was $170 million; OPay raised a $400 million Series C; Wave and Andela each picked up $200 million. Then Chipper Cash did the double: a $100 million Series C and a $150 million extension for its unicorn round months later.

Others include TymeBank’s $180 million Series B, Jumo and MNT-Halan’s $120 million rounds, TradeDepot’s $110 million and MFS Africa’s $100 million.

The only non-fintech deals were Andela and TradeDepot (although the latter has an embedded finance play). Also, all but two deals were solely equity-based: TradeDepot and MFS Africa raised a mix of equity and debt.

A handful of local acquisitions and a monumental exit

Digital payments gateway MFS Africa is one of Africa’s few corporate investors and acquirers. Over the past five years, the company has made strategic bets across overlooked startup regions in Africa, investing in Julaya, Maviance and Numida. And in terms of acquisitions, Beyonic and, most recently, Baxi.

Last year, the trend of seeing local companies buy each other played out and continued into 2021. Some interesting acquisitions include TLcom-backed Kenyan consumer experience platform Ajua buying WayaWaya; Nigerian bus booking and Techstars-backed Treepz expanding into Ghana and Ugabus after getting Stabus and Ugabus; and Flutterwave making a foray into the creator economy space with the Disha acquisition.

Others include Jiji’s acquisition of Cars45, Egypt’s B2B e-commerce platform MaxAB purchasing YC-backed Waystocap, thus expanding into Morocco, and Cheki selling its businesses in Kenya and Uganda to Nigeria’s Autochek.

Like the MFS Africa-Baxi deal — which both parties claimed to be the second-largest fintech acquisition in Africa after Stripe-Paystack — the other acquisitions listed were undisclosed

Why African startups don’t disclose their acquisition figure is a topic for another day. Personally, reporting such deals may not be appealing going forward (if they remain undisclosed) unless they involve international expansion plays. Case in point: Nigerian healthtech Helium Health acquiring UAE’s Meddy (the first of its kind between sub-Saharan Africa and the GCC) and Australian BNPL player Zip buying up South Africa’s PayFlex.

And international expansion via acquisition gets more exciting when a figure is attached; for instance, data center Equinix announced that it would acquire Nigeria’s MainOne, for $320 million. The news was the highlight for this year’s acquisition deals, not only for its size but also because MainOne is a female-led company, with Funke Opeke as its CEO.

More female-led startups raised million-dollar rounds

Funke Opeke is one of the very few founders to have come this far: running an African tech company to the point of exit. She’s also probably the only female founder on the continent to have raised nine figures cumulatively for her business.

Opeke’s experience is an outlier. In Africa and globally, funding doesn’t come easy for female-led companies. A report by Briter Bridges from the middle of this year looked at 1,100+ companies to have received VC money between 2013 and May 2021 (pegged at $20 million or less).

Per the report, only 3% of the $1.7 billion raised within this period went to all-female founding teams compared to 76% for all-male teams.

So, it’s great news when female-led startups raise a million dollars or more in Africa. And it indirectly contributes to how well the region performs, as we can attest to this year which recorded more than ten deals, signalling an improvement in VCs (both gender-focused and gender-agnostic) sourcing for female-led teams to invest in.

The female-led startups that raised a million dollars or more this year include Shuttlers, Bankly, Lami, Okra, Klasha, Akiba Digital, Ejara, Kwara, Edukoya, Reelfruit and Jetstream.

Local investors — and founders — stepped up their game

Alitheia IDF is an investor in Reelfruit and Jetstream. The women-focused firm, led by principal partners Tokunboh Ishmael and Polo Leteka, is a $100 million private equity fund for gender-diverse businesses in Africa.

It’s also one of the local funds that raised huge sums of money this year to write checks for African startups across different stages. Others include Ventures Platform, LoftyInc Capital, Voltron Capital and 4DX Ventures, all sub-Saharan-based VC firms with a pan-African strategy.

Up north, investors such as Sawari Ventures and Algebra Ventures pulled their weight backing startups, particularly in Egypt, where startup innovation and investment has taken off astronomically.

Local and Africa-focused investors also took up entire seed to Series A rounds of some companies in sub-Saharan Africa (Appzone, Payhippo, to name a few), which rarely happened in previous years. Future Africa, Kepple Africa, Launch Africa, and others continued with their pace from 2020 and wrote many new and follow-on checks this year.

We even noticed how active founders like Flutterwave CEO Olugbenga’ GB’ Agboola, Paystack founders Shola Akinlade and Ezra Olubi, and Chipper Cash founders Ham Serunjogi and Maijid Moujaled took part in some early-stage rounds too.

Nigeria became the unicorn capital; Egypt, a powerhouse

In November 2019, three fintech companies, Interswitch, OPay and PalmPay, raised a cumulative $360 million from American and Chinese investors. That announced Nigeria as Africa’s unofficial capital for fintech investment and digital finance startups.

Fintech opportunity in Nigeria is the largest on the continent. With over 40% of Nigerian adults having bank accounts and digital payments hitting more than $250 billion in 2019, it’s no surprise that the startups facilitating transactions for the unbanked (OPay) and providing gateways (Interswitch and Flutterwave) are now worth more than $1 billion.

The three companies, including Andela, started operations in Nigeria’s commercial city, Lagos, earning Nigeria the status of Africa’s unicorn capital in 2021.

For a long time, Nigeria has been one of the three countries that receive the bulk of local and international venture capital, including Kenya and South Africa. The three countries present Africa’s most connected populace and growing economy; the perfect environment to attract foreign capital before others.

But then Egypt stepped into the picture in 2017, and with time, the North African country became part of the “Big Four” as the country began attracting venture capital eyeballs. And after quietly spending the last couple of years at the rear, Egypt picked up impressively in 2020 and this year surpassed Kenya to become the region’s third most active investment region.

As this report aptly put: “Seemingly from nowhere, Egypt is suddenly on the radar as a key African startup funding destination, highlighting the prospects for continental growth of the nascent sector.”

Egypt also has bragging rights in producing the first SPAC deal on the continent. In July, Cairo and Dubai-based ridesharing company Swvl announced that it was going public via a merger with Queen’s Gambit Growth Capital. It’s a deal that will value Swvl, one of the country’s success stories, at almost $1.5 billion once completed.

With a large population and impressive GDP per capita, the North African country raised almost $600 million this year. While it’s less than what Nigeria and South Africa raised at over $1.4 billion and $830 million, respectively, some observers predict that Egypt will surpass South Africa by next year if it keeps up with its pace.

There are a few reasons behind this thinking. In Nigeria, South Africa and Kenya, fintech is the sector that receives the most funding. The major sector is e-commerce and retail in Egypt, but the country is a hot spot for fintech, too, evident in holding the highest pre-seed rounds in both categories (Rabbit’s $11 million and Telda’s $5 million rounds).

When I wrote this piece earlier this year, the largest pre-seed round at the time was Autochek’s $3.4 million. Rabbit’s eight-figure pre-seed is thrice that amount. Sources recently told TechCrunch that another Egyptian startup will close a pre-seed round that high next year.

Mindblowing pre-seed investments like these are one of the many indicators of how fast venture capital has picked up in Africa. The continent’s startups raised over $4 billion this year and minted five unicorns. No one knows what to expect in 2022, but there’s a nuanced sanguinity that we would see “more of everything” including some IPOs (I might be reaching here) so brace yourselves.

Nigerian shared mobility startup Shuttlers raises $1.6M, plans pan-African expansion

Shared transportation in Nigeria, Africa’s largest country by population, is a thriving business, at least when done the conventional way: offline.

With millions of Nigerians using danfo minibuses and okadas to commute to their various workplaces and destinations, mobility startups have sought to digitize the market. However, most have found little luck, especially those in the two-wheeler mobility space.

While most mobility tech in the country is centred around two-wheelers and car-hailing, there’s been hardly any deliberate disruption in the bus-sharing and mass transit space.

Shuttlers, a “tech-enabled scheduled bus sharing” company, is itching to change that. After years of bootstrapping, the company has raised $1.6 million in seed funding from several investors to blitz scale within and outside Nigeria.

Chicago and Africa-focused investment firm VestedWorld led the round. Fintech unicorn Interswitch, Africa-focused VCs Rising Tide Africa, Launch Africa, EchoVC, Consonance Investment, CcHub Syndicate, CMC 21 & Alsa, ShEquity, Five35, Sakore and Nikky Taurus also participated in the round.

CEO Damilola Olokesusi founded Shuttlers in 2016 to address the issue of inefficient transportation costs in Nigeria’s most renowned urban city, Lagos. Via its ridesharing platform, Shuttlers provides companies with better mobility options for their employees.  

But when Shuttlers launched in 2017, it did not have a functional mobile application. Instead, the company ran an unconventional online model using Slack, email and WhatsApp to communicate with its customers.

Yet, that was enough to onboard its first set of business clients. Tech talent unicorn Andela was Shuttlers’ first B2B2C client, Olokesusi told TechCrunch over a call.

The B2B2C plan is one of three main offerings Shuttlers providers; here, companies split payment of transport fares with their employees whichever way they see fit. The others include B2B, where business clients pay the complete fares of their employees and B2C, where individual customers pay fares themselves.

“Our mission is to transform the way people commute around the world by building a global partner network and connecting communities of shuttlers like we are presently doing in Lagos, Nigeria,” Olokesusi said in a statement.

Following a revamp in 2019, Shuttlers now offers a fully functional app that allows mobile professionals on its three plans to book rides. Through the platform, commuters can book a seat on one of the buses that goes along predetermined and scheduled routes.

According to the company, commuters pay 80% less when using its service instead of other ride-hailing services “without surges and peak-period pricing.”

Some of its other features include live bus tracking, optimal routing based on traffic and digital payments, the company said. It also has a subscription feature where commuters can schedule rides in advance over a period of time.


Image Credits: Shuttlers

Despite raising just 3 million (~$6,000) from friends and family and grants since 2016, Shuttlers’ growth has been staggering. The company claims to have over 10,000 users across its mobile app and website users.

More than 100 unbranded and branded buses are on its platform, ploughing over 30 routes in Lagos with over 300 bus stops. In total, they have recorded more than 2 million trips since the company’s inception.

Olokesusi added that her company sells more than 6,000 bus tickets daily, which means over 3,000 people take two-way trips each day.

Having done this much with so little, why is the company raising a seed round now? For one, it seems the company wants to go head-to-head with VC-backed competition; its funding is coming at a time when newer entrants are gaining ground across the country, most notably from Toronto and Lagos-based Plentywaka.

The Techstars-backed company is actively fueling its expansion across Nigeria and Ghana having raised more than $1.5 million in funding, money also used to acquire a similar player in Ghana.

However, Olokesusi says investors’ interest in the company was the main reason behind the company’s first venture capital intake.

“We were not actively looking for investors; however, there is now more attention in the shared mobility industry because of companies like SWVL. Now, investors are interested in this and think local mobility plays can be valuable solutions,” Olokesusi said.

“We just made the right decision for the company at this particular right time so we can get ready for the opportunity that happens after. Now we are ready to take over the African market, starting with Nigeria and West African markets in the next couple of months.”

The company has begun operations in Nigeria’s capital city Abuja, but Olokesusi doesn’t say which other cities within and outside Nigeria Shuttlers will expand to next.

In a similar train of thought, Nneka Eze, the managing director at lead investor VestedWorld, said her firm believes the “investment will help Shuttlers extend its offering to adjacent markets and help solve inefficiencies in the transportation sector across regions in Africa.”

Olokesusi is one of the few female founders on the continent to have raised a significant round from VCs this year. But her journey to Shuttlers was accidental, as she tells me how working in an oil and gas firm took the front seat of where she wanted to work after studying chemical engineering at university.

The founder was born in Lagos but grew up in Ibadan, a neighbouring city with a less chaotic transportation system than Lagos. Years after returning to Nigeria’s commercial city, Olokesusi would encounter the infamous and troubling method of booking bus seats in public buses (danfos), which she says “troubled” her, narrating her experience in this interview.

“There were fewer issues of people running after buses in Ibadan. In Lagos, I remember when I was walking to a bus stop for the first time, I was actually shocked how people were running very fast to get seats. That was my first interaction using danfo buses in Lagos, but like everyone, I got used to it.”

The CEO said she attended some tech conferences and meetups that opened her mind to the possibilities of starting a tech company to solve problems around her. However, it wasn’t until her internship and her first place of work following graduation that the idea for Shuttlers started to take shape.


Damilola Olokesusi (CEO, Shuttlers)

She experienced two contrasts in both workplaces. Her first employer had buses to transport Olokesusi and her colleagues from home to work and vice versa. Meanwhile, at the second, she made use of danfos once again.

“What broke the camels back was my first time leaving the country in 2014, experiencing what it meant to live in a city with smart transportation. By the time I came back to Nigeria, I didn’t want to go back to using public transportation,” she said.

Upon her return, Olokesusi recreated the staff bus model. She felt the model could replace danfos and personal cars — the first-choice options professionals use to get to work. With Shuttlers, she also wanted to democratize the model and make it accessible to other users whose companies might not afford such services.

Five years in, Shuttlers is not only profitable while raising money and making expansion plans; it is also concerned about fostering its environmental impact.

The latter is evident in a recent survey Shuttlers recently conducted where almost 30% of its daily commuters own cars. In essence, the company, in its little way, is reducing the amount of carbon dioxide that those commuters would have otherwise emitted if they used their cars daily.

“Every single time that our buses are on the road, we are reducing the number of cars on the road. We are also optimizing routes and reducing the number of buses and emissions on the road,” said the founder and CEO. “As we proceed, we’ll be very intentional in recording and calculating how much gas emissions we’re reducing per route and daily, maybe also release reports on how we’re impacting the environment positively.”