Fundraising frenzy in Africa's mobility sector

From the newsletter

Most fundraising in African mobility happens under the radar. Little information is made public. But MobilityX Africa, a data platform run by a venture fund, has shared an inside look at who is raising. Ten startups are seeking $11 million; 5 are in East Africa, 2 each in North and West Africa, and 1 in the south.

• The East Africa region is seeking the most funding, at $6.42 million, and West Africa the least, at $0.656 million. South Africa comes second despite only having one company raising funds. 

• Two of the top three companies raising the most money are in Kenya: Maramoja, raising $2.1 million, and Fika Mobility, raising $1 million.

More details

• The companies are spread across different categories: Three in EV charging and infrastructure (Fika Mobility, HNE Futures, Tricity); two in EV manufacturing and distribution (Mbay Mobility, Pixii Motors); three in Mobility-as-a-Service (MaaS) platforms (Gigmile, IZI Go, Maramoja); and one in Fleet Management and Telematics (Khomba Solutions).

• The MaaS category is raising the most funding, at $5.1 million, followed by EV charging and infrastructure, at $2.42 million, then fleet management and telematics, at $2 million, and finally, EV manufacturing and distribution, at $1.55 million.

• Raising investment capital for startups is a difficult task. Many struggle to prove their business model works. 

• IZI is the only company of the listed 10 companies that raised funding last month. The company raised about $220,000 to expand its bus fleet and now is raising $1.5 million to expand its business and build a battery lab.

• East African mobility startups seem to know the secret to fundraising. In our funding analysis last week (see here), East Africa topped in raising the most funding.

Our take

• The mobility sector in Africa is still in its early stages and relies heavily on raising investment capital. But this isn't an easy task, especially since the business models are new and need strong pitches and convincing arguments to win investors' hearts.

• The task is not entirely on the companies raising money; government policy also plays a crucial role, and companies have no control over this. East African countries have been at the forefront, with favourable policies, including tax reductions and VAT exemptions, to woo investors. This has enabled mobility startups to sprout and flourish.

• West African countries like Nigeria, with a huge population and high motorisation rate, could be central to attracting funding. But the policy and regulatory space needs to mature enough to attract EV startups.

• Even then, one challenge remains across Africa: Consumers lack the capital to purchase EVs upfront and need financing. With the adoption of EVs picking up, this could be the next big market for investors in Africa. Those companies that can prove they can solve consumer woes stand to attract the most funding in the future.