Moove expands outside Africa

From the newsletter

Nigeria-based mobility startup Moove is expanding its market reach to the USA by partnering with Waymo, Google’s autonomous vehicle subsidiary. The company is targeting non-African markets and in October expanded to Mexico, bringing its country operations to 12 across four continents and serving over 30,000 mobility entrepreneurs.

• The countries include Kenya, Uganda, Ghana, South Africa, the United Kingdom, the United Arab Emirates, and India.

• In March 2024, the company received $100 million in Series B funding from Uber, Future Africa, Dubai-based The Latest Ventures, AfricInvest, Palm Drive Capital, and Triatlum Advisors. Since its inception in 2020, the company has raised over $444 million.

More details

• Moove provides vehicle financing to drivers working in ride-hailing, logistics, and deliveries. Their model allows drivers to pay for their vehicles in installments by deducting a percentage of their weekly income. This approach is common in the EV industry to overcome the high upfront cost of electric vehicles. Other companies, such as M-KOPA, Mogo, and 4G Capital, also use this model to make EVs more affordable.

• However, Moove has faced challenges in Africa, particularly in Nigeria, where inflation has made it difficult for drivers to meet their payment obligations. Consequently, the company has shifted its expansion strategy to focus on more mature markets with stable economies and developed credit scoring systems, which it believes will present lower risks. Moove has already achieved profitability in the U.K. and UAE, contrasting sharply with its struggles in African markets, and aims to achieve company-wide profitability by 2025 by relying more on its mature markets.

• However, the African EV market risks depend on where you invest and your business model. M-KOPA has been expanding in Africa with operations in five countries and recently announced its shift to focus on EV financing, citing high potential. The company projects its annual revenue to exceed $400 million by year-end.

• Interestingly, Moove's expansion strategy differs from other African mobility players, who typically expand within their regions before venturing outside their regions. For example, M-KOPA expanded from Kenya to Uganda before entering Nigeria and South Africa, while Ampersand expanded from Rwanda to Kenya. Spiro followed a similar regional approach, starting in West Africa (Benin, Togo, and Nigeria) and then expanding to East Africa (Kenya, Rwanda, and Uganda). In contrast, Moove and another Egyptian company, Shift EV, have targeted key global markets, with Shift EV expanding directly to Spain.

• This deviation from the typical regional expansion model shows there is a need for diversification in the evolving EV market. While the African EV market is still maturing, investors anticipate challenges related to policy changes and market growth. Therefore,  pushing for diversification can help to mitigate risks and maximise returns.

• Expansion outside Africa is not without its challenges. Established local players in the sector possess greater knowledge and a deeper understanding of the market, potentially making it difficult for new entrants to compete. However, Moove understands this and is partnering with local players like Waymo to forge a strong team capable of competing effectively.

Our take

• Emerging markets are undoubtedly risky. This is largely due to underdeveloped market infrastructure and credit rating systems, which make it difficult to accurately assess borrower risk and predict potential defaults.

• Venture capitalists seek big winners. Developed economies generally offer greater stability, predictable regulatory environments, and established credit scoring systems, which translate to lower risk. Meanwhile, developing economies often have less competition and more room to innovate. For venture capitalists, a mix of the two can work well.

• Expansion outside Africa is not an approach every other EV startup can deploy to grow. It has its challenges. The maturity of developed markets means greater competition, demanding substantial resources and strategic planning. Very few EV startups have the financial capacity or operational expertise to successfully execute such a move.