An EV investor raises uncomfortable questions

From the newsletter

A LinkedIn post by an EV investor Stuart Minnaar sparks a question about the mobility ecosystem. In his post, Stuart shares a list of several mobility startups that entered the African market and failed. Although these pioneers provided valuable lessons for those who followed, their market exits raise a crucial question: why did they exit?

• Across Africa, urbanisation is pushing demand for transportation, with projections indicating an additional 300 million urban residents by 2050. 

• Mobility startups, both traditional and electric vehicles, are attempting to solve this problem. So far, some have been crushed in the attempt, but more are coming, having learned valuable lessons from their predecessors.

More details

• In Kenya, over 40 mobility startups have entered the market. Some in manufacturing of fuel vehicles and some in providing transport services.

• Mobius Motors entered the Kenyan market in 2016 and raised over $56 million in funding. The company focused on manufacturing low-priced SUVs designed for African terrain. Despite releasing two models, it failed to capture the market due to competition from second-hand imports and entered liquidation in 2024.

• NopeaRide launched in 2018 as Kenya's first all-electric taxi service; it initially showed promise. However, the COVID-19 pandemic disrupted its business model, and the insolvency of its main investor, EkoRent Oy, led to its closure in 2022.

• SafeBoda, a ride-hailing company, launched in Uganda in 2017 and expanded to Kenya a year later. The company faced market and regulatory challenges, leading to its exit in 2020. However, it relaunched in Kenya in February 2024 and is now including electric motorcycles in its fleet.

• Mondo Ride, a Kenyan ride-hailing company, launched in 2016, raised $7 million in funding and operated across five cities. Despite securing over 100 corporate clients, it exited the market in 2019 due to failed fundraising attempts.

• SWVL, an Egyptian-based shared mobility services company expanded to Kenya in 2017 and raised over $100 million in funding. However, it closed down operations in Kenya in 2022, citing difficult economic times.

• Nigerian-based Gokada started as a ride-hailing company in Lagos in 2017 and raised $5.3 million in series funding. Following a government ban on commercial motorcycles in 2020, it successfully pivoted to delivery and logistics services.

• In Tanzania, Little Cab launched in 2018. It raised $3 million in funding from Safaricom and Craft Silicon. It exited the Tanzanian market in 2022 due to regulatory challenges.

• In South Africa, WhereIsMyTransport launched in 2016 and raised $27 million to map formal and informal public transport networks in over 50 cities across Africa, Latin America, and Asia. Despite securing clients like the World Bank, it closed down after seven years due to an inability to secure further funding.

Our take

• Being a first mover is an advantage, but not always. Sometimes the market's unstructuredness and lack of clear frameworks can kick one out. In countries with developed structures and policies, it can work, but with developing countries, sometimes regulations can lock you out.

• In business, it's all about risks. EV startups are growing despite the lack of clear policies and regulations. For example, in Ethiopia, the startup proclamation is coming after the country banned the importation of fuel vehicles.