Cars45.com, a used car startup in Nigeria, has raised $5 million in venture funding.
According to a report in TechCrunch, the Series A round was led by Frontier Cars Group, which is a holding company that includes Balderton Capital, EchoVC, TPG Growth and NEA as backers. Cars45 said it will use the capital to improve its platform that buys, sells, prices and rates the conditions of pre-owned cars.
“The used-car market in Nigeria is generally a big hassle. There’s so much mistrust, no vehicle history and not much of a structured dealer network,” Cars45 CEO Etop Ikpe said in the report. “We’ve created something that changes all that, offering transparency, speed, convenience and safety in a highly frictional and opaque market.”
According to TechCrunch, the service works like this: owners enter their vehicle information for a free quote, they then schedule an appointment at one of the company’s inspection centers in Nigeria and, following a multi-point evaluation (that includes looking at the engine, brakes, tires and a road test), then Cars45 makes an offer for the car.
If the offer is accepted, the company will wire the payment to the bank account of the owner within 45 minutes. After Cars45 prices the car and creates a digital service history, it offers the cars it buys to a private network of buyers. Cars45 makes money on “fees from that private network of pre-verified buyers” who gain access to Cars45 vehicles, the executive said in the interview.
Ikpe told TechCrunch there is a potential for the company to expand into other revenue streams, including inspections, financing and online auto research similar to Kelly’s Bluebook in the U.S.
Cars45 was founded in 2016 and has been actively buying and selling cars since then, noted the report.