Mecho Autotech - Afrikan Heroes

Mecho Autotech Secures $2.4 Million from Global Investors to Transform Car Repairs in Nigeria

September 15, 2023

Mecho Autotech, a startup specializing in automotive spare parts, vehicle repairs, and maintenance services, successfully secured a substantial pre-Series A funding round, amassing a significant $2.4 million in investment. This funding was provided by notable investors, including Global Brain Corporation, Ventures Platform, and Uncovered Fund. The primary aim of this investment is to fuel Mecho Autotech’s expansion plans and support its strategic pivot into the wholesale distribution of aftermarket spare parts.

Notably, Mecho Autotech operates in Nigeria, a market teeming with potential due to its vast fleet of over 12 million registered vehicles, predominantly used and requiring consistent maintenance. The investment will be instrumental in addressing the pressing challenges faced by the company, particularly in sourcing quality replacement parts, which CEO Olusegun Owoade emphasized in a recent interview.

Why The Investors Invested

Investors were drawn to Mecho Autotech for several compelling reasons rooted in undeniable market dynamics. Firstly, Nigeria’s automotive aftermarket is a colossal $8 billion industry, with spare parts accounting for a substantial 80% of its value. This sector is driven by Nigerian vehicle owners, who collectively spend an average of $650 annually on maintenance. Furthermore, the market’s landscape is characterized by over 12 million registered vehicles, the majority being imported and pre-owned. However, this industry remains highly fragmented and informal, leading to significant inefficiencies in the spare parts supply chain.

The investors recognized the strategic importance of Mecho Autotech’s entry into the wholesale spare parts distribution segment. It’s critical to acknowledge that more than 95% of businesses in this sector are small and informal, lacking robust inventory management and consistent quality standards. Consequently, Mecho Autotech’s decision to secure partnerships and import spare parts aligns perfectly with the industry’s needs. The involvement of Global Brain Corporation, a key investor, facilitates access to Asian parts manufacturers interested in supplying the African market.

A Look at Mecho Autotech

Founded in 2021 by CEO Olusegun Owoade, Mecho Autotech is a forward-thinking startup operating primarily in Nigeria’s vibrant automotive aftermarket. The company’s core mission is to bridge the gap between vehicle owners and efficient repair and maintenance solutions. Its unique approach connects consumers with a network of approved workshops, streamlining the process of addressing automotive issues.

Mecho Autotech’s innovative model also extends to wholesale spare parts distribution, ensuring that over 150 parts vendors have access to a steady supply of in-demand spare parts such as tires, suspension components, brakes, and batteries. This approach eliminates inventory challenges faced by parts vendors and offers a streamlined experience to workshop owners and corporate fleet managers.

Moreover, Mecho Autotech is poised to launch a cutting-edge app in Q4 2023, which will not only facilitate inventory finance for vendors but also provide working capital solutions for workshop owners. This app will also empower corporate fleet owners by offering tools to manage vehicle maintenance data. By collecting data on spare parts demand and fostering financing opportunities, Mecho Autotech aims to bring greater efficiency to the market.

To support its financing initiatives, the startup has established banking partnerships, currently securing a credit line of ₦650 million (~$675,270). These partnerships are integral to Mecho Autotech’s efforts to enhance its credit capabilities and expand its presence in the market. In conclusion, Mecho Autotech’s multifaceted approach, strategic investments, and commitment to addressing industry inefficiencies position it as a pivotal player in Nigeria’s thriving automotive aftermarket. Its potential for sustained growth and impact within this landscape is unmistakable.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Nigeria’s Mecho Autotech Obtains $2.1m To Expand Its Car Repair Business

February 10, 2022

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.

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.

Olusegun Owoade, Co-Founder and Managing Director of Mecho Autotech

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.

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 car repair Mecho Autotech car repair

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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