Mecho Autotech, a Y Combinator-backed Nigerian vehicle repair and maintenance startup, has closed a $2.15 million seed investment. Future Africa, Hoaq Capital, Cathexis Ventures, V8 Capital, Silver Squid, and Tekedia Capital participated in the round.
The round was oversubscribed by over 300 percent and is the largest investment to date for a vehicle maintenance startup in sub-Saharan Africa.
The Company which operates a digital platform that connects business-to-business (B2B) and business-to-consumer (B2C) with both in-house and third-party mechanics will use the capital to expand its multi-channel service capacity, engineering team, and marketing budget for B2C acquisition.
“When you consider the state of Nigeria’s used cars and our roads, car maintenance isn’t optional. We want to automate high-quality vehicle repair and maintenance for Nigerians by making it easy, convenient, and affordable. We aspire to build a maintenance culture in Nigeria and beyond to keep roads and people safe,” Olusegun Owoade, Mecho Autotech CEO and Co-founder said.
Co-founded by Olusegun Owoade and Ayoola Akinkunmi in 2021, Mecho’s in-house capacity consists of workshops, known as Mecho Shops, and Mecho Mobile operations. To date, the Company has boarded over 7,000 third-party mechanics to the platform with workshop and mobile operations.
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Mecho Autotech is a multi-channel platform for auto repair and maintenance, offering mobile service to meet a customer at their own location if preferred. Customers can also go to a Mecho Autotech workshop or partner garages for service. For business customers, Mecho Autotech can manage fleet-wide needs with flexibility to request repairs on demand.
In addition to the growing B2B revenue base, Mecho has expanded into service for B2C customers with the launch of its B2C app in January. The Company aims to grow in B2C via a subscription service model and individual service requests with a target of 25,000 customers this year.
Moreover, Mecho 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.
When consumers download the Mecho Autotech app, they enter their vehicle’s unique identification number (VIN) or basic vehicle information. Based on the vehicle’s specifications, the Mecho Autotech algorithm calculates a routine vehicle maintenance program and subscription fee which can be paid monthly, quarterly, or annually.
According to the company, Africa’s automotive repair and maintenance industry are highly fragmented, undercapitalized, and fraught with poor service outcomes due in part to misaligned incentives. Nigeria has over 12 million registered vehicles, and owners spend an average of $650 per year on maintenance and repairs.
Approximately 90 percent of Nigeria’s car market consists of used vehicles with only 5 percent of car sales financed. Despite the sheer number of used cars on Nigeria’s roads which require check-ups to prevent breakdowns, regular vehicle maintenance is uncommon.
Existing service providers, the majority of whom are not formally trained and lack sufficient tools and equipment, are often inefficient and provide inconsistent service quality.
To address the large and difficult task of servicing corporate fleets, Mecho has built three Mecho Shops across Lagos and will continue to expand this capacity. Since its launch in April 2021, the Company’s B2B customers include some of Nigeria’s largest corporate fleets including Uber partner Moove, Tolaram Group, and UAC Group among others.
