Toyota drives towards African mobility startups

By Oluwatosin Adeshokan for Quartz Africa

After over fifty countries signed the African Continental Free Trade Agreement in 2018 economists and trade experts estimated the continent could see a $16 billion jump in from intra-regional trade. If successfully carried out it would help create a single African market with total GDP of over $3 trillion—the largest free trade area in the world.

One of the big oppportunities has always been how to improve interconnectedness across the continent’s sprawling landmass and logistics companies in sub-Saharan Africa in particular have been targeted by investors to create solutions for a challenge that has worsened in the decades since independence.

Japanese auto giant Toyota is making moves to get in early on the potential of African markets—particularly the future of mobility in the fast-growing region as barriers start to fall and startups take advantage of software and internet-enabled solutions to get round the limitations of physical infrastructure networks.

Last August its trading arm Toyota Tsusho Corp. set up a venture capital unit called Mobility 54 specifically for African markets. Mobility 54’s stated aim is to invest in Mobility as a Service (MaaS) and CASE (Connected – Autonomous – Shared & Electric) startups on the continent.

Mobility 54 made its first major investment of $7.6 million in Sendy, a Kenyan logistics startup in Nairobi late last month. The investment was part of a $20 million Series B round led by Atlantic Ventures.

Sendy has operated for five years connecting drivers with businesses using technology to make it easier to move goods locally and regionally through the East African community of countries. As a part of the $20 million raised, there is an R&D agreement with Toyota as the company is looking to contribute to solving challenges of the mobility industry of Africa. Sendy is also backed by DOB Equity, a few private investors and CFAO, a member of the Toyota Group.

Toyota’s Mobility 54 investment comes after inking an agreement between Toyota Tsusho and Sendy at the Tokyo International Conference on African Development [TICAD] last August in Yokohama, Japan.

Sendy is on a mission to improve the ease of trade and transit across Africa says Meshack Alloys, chief executive and co-founder of Sendy. “We have moved goods worth over 300 billion Kenyan shillings (~$1 billion)  for businesses across East Africa with over 30,000 customers on our platform,” he says.

The startup hopes to use its new funds to expand to other African countries and tap into a bigger African market open for business.

Through the years, the Toyota Tsusho has invested in several social development programs through its CSV Africa fund, a fund it describes as “a social contribution-oriented venture development fund aimed at creating new jobs and raising the economic independence of people in Africa”. The fund has invested in agricultural projects in Zambia, leather goods sewing business in Ethiopia and most recently, a venture to improve Kenyan medical services through ICT.

But with Mobility 54 Toyota is getting on board a growing trend to back logistics companies in Africa as investors hope to get a foothold in an underserved, largerly untapped market. Lori Systems, another Nairobi-based logistics startup, raised $30 million from Chinese investors in November. Earlier in August, Nigerian Kobo 360 raised $20 million in a Series A round backed by Goldman Sachs.

In 2019, startups operating on the continent received a total of $1.3 billion in startup funding. It is the first time annual Africa-focused startup funding crossed the $1 billion mark and by some estimates even topped $2 billion.

Nigeria and Kenya were the continent’s top startup investment destinations, jointly accounting for 81.5% of investment received in 2019.  Chinese investors presence in Africa has extended to the fintech space with Opera’s OPay going against Palmpay with both companies raising over $210 million in the last year. Visa and Stripe led a $8 million Series A round in Paystack, a Nigerian online payments company. Mastercard participated in a $20 million Series A extension round in Flutterwave, another Nigerian payments solutions startup.

This post first appeared on Quartz Africa

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