Mecho Autotech, which connects automobile owners with professional car repair and maintenance providers and is sponsored by Y Combinator, has secured a $2.15 million seed round.
“When you consider the number of used cars in Nigeria and the condition of our roads, car maintenance is not optional. Through automation, we want to make it convenient and affordable for Nigerians to access high quality vehicle repairs and maintenance,” said Olusegun Owoade, Co-Founder and Managing Director of Mecho Autotech.
Future Africa, HoaQ Capital, Cathexis Ventures, V8 Capital, Silver Squid, and Tekedia Capital were among the investors in Mecho’s seed round.
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The round was “oversubscribed by over 300 percent,” according to the business, and it claims to be the largest investment in a car maintenance startup in Sub-Saharan Africa to date, owing to its niche market and lack of competitors.
The funds will be used to “grow its multi-channel service capacity, engineering team, and marketing budget for B2C acquisition,” according to the company.
The company also said a portion of the seed money would also be used to increase its spare parts value chain. The funding will also aid in the scaling of Mecho Autotech’s mobile application, which was introduced last month for its B2C customers. The two-year-old company says it wants to reach 25,000 users this year and will charge them a monthly, quarterly, or annual subscription fee.
The startup has acquired considerable traction since it was founded. So far, Mecho Autotech has onboarded over 7,000 third-party mechanics across three workshops in Lagos that serve B2B customers, including Shuttlers, Moove, Tolaram Group, and Kobo. It charges a 15% commission fee, with 10% coming from service charges and 5% from spare parts charges.
A Look At What The Startup Does
Mecho Autotech, which was founded by Olusegun Owoade and Ayoola Akinkunmi, has built a network of approved in-house and third-party mechanics with client affordability (for enterprises and retail customers) in mind, according to Owoade.
“So we created a network of vetted technicians throughout 35 states in Nigeria to address the country’s terrible auto repair culture,” he explained. “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.”
To launch Mecho, Owoade oapproached Akinkunmi, an automobile engineer with ten years of expertise who formerly managed a vehicle maintenance company in Lagos. They began work on the project in 2019, however it was not completed until April 2021. The startup was accepted into the YC Summer 2021 batch and already works with 40 B2B customers who possess over 20,000 automobiles. Over 2,000 of these vehicles have been serviced.
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Mecho Autotech chose to engage with commercial clients first, according to Owoade, since it allowed the company to fine-tune its service. He explained that these clients, who own huge fleets, usually collaborate with many workshops and spend more than $30 million on car repairs and maintenance each year. However, with Mecho Autotech, they will deal with a single company that will coordinate all of their workshops.
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.
Mecho Autotech chose to engage with commercial clients first, according to Owoade, since it allowed the company to fine-tune its service. He explained that these clients, who own huge fleets, usually collaborate with many workshops and spend more than $30 million on car repairs and maintenance each year. However, with Mecho Autotech, they will deal with a single company that will coordinate all of their workshops.
Mecho Autotech car repair Mecho Autotech car repair
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer