The world we are living in has made that abundantly clear! Access to the right data pools, clean structuring and curation processes, and proper data analysis are instrumental in providing better service to customers. While this might be true for every industry, nowhere is it more apparent than in Fintech - most specifically lending.
If you’re in lending, competition for the most accurate models and algorithms is cutthroat. Hence, every lending company has to build a competitive advantage based not only on product and price (as every other company does), but also on risk assessment - having the right data is crucial to pull this off. That’s why coming across a company that is able to do so successfully on all three fronts is a rare beauty.
Today, we are excited to share the belief that our latest investment, Moove, is such a case and has chosen to tackle the car financing space in Africa.
Product: Having started with their exclusive partnership with Uber, Moove is embedded within their app’s (or potentially any other ride-hailing platform’s) offering and enables drivers to get access to funding to purchase their own car. This is a killer feature for any ride hailing platform - especially in Emerging Markets - where these marketplaces often face a supply-side problem through a shortage of cars. Embedding a smooth car financing offering within one of the largest (if not THE largest) ride-hailing platforms in the world is a massive selling point for them. Riders love it as they immediately become independent and end up owning their own vehicle after 2-4 years!
Risk Assessment: Moove uses Uber’s proprietary driver performance data to underwrite drivers and provide them with a vehicle to perform their job. The Uber app is the single source of truth for drivers and contains all sorts of information about them:
...the list goes on and on! Such a rich data source coupled with the proper driver background checks leads to a high acceptance rate and few Non-Performing-Loans (NPLs).
Price: Price has a direct correlation with the accuracy of your credit risk assessment. The better your customer assessment is and the lower the rate of your NPLs, the less interest you can charge your customers. It comes as no surprise then that Moove drivers get access to the lowest interest rates of any car financing company in the region.
Let’s take a look at some of the most successful Fintech lenders. When these challengers started to pop-up in the market as early as 2005, each one of them had their hook into the market.
For Klarna, it was allowing customers shopping in the then nascent (and often untrustworthy) world of ecommerce the possibility to receive and return a good before actually paying for it. For Brex, it was the possibility to give startups, often already with millions of dollars in the bank account, a credit card in less than five minutes. For Wayflyer (as we’ve written about here), it was a way for ecommerce businesses to get access to funding using proprietary data offered by Google and Facebook ads.
So what is the hook for Moove? Moove enables a humongous population in Emerging Markets to be part of the gig-economy. Emerging Markets - and more specifically, countries in Sub-Saharan Africa - have fairly small formal economies and huge informal economies with large numbers of people who are willing to work as freelancers as riders or delivery riders.
Now things start to get even more interesting when you take a look at the markets that Moove is targeting. Nigeria, for example, has a population of about 200m people but a passenger car penetration of 40,000 vehicles to service them. When you compare that to Mexico’s 120m population and about 600,000 Uber drivers only (not to mention all other ride-hailing platforms, taxis, public transportation vehicles etc.), you begin to see why Lagos is one of Uber’s top ten growth markets. Not only that, but more than half of all current Uber drivers in Nigeria are driving a car that is more than 10 years old.
This would be an extremely attractive opportunity in-and-of itself; the pinnacle of excitement for Moove, however, comes with what they build on top of this. Moove leverages the view into the drivers riding data, and therefore also the driver’s financial life, to offer them digital wallet and banking functionality.
By being connected to the driver’s primary source of income, the wallet is integrated into the holy grail of Neobanking: payroll. Almost effortlessly, Moove’s hook seamlessly achieves what every digital wallet strives for. The upselling opportunities for financial products with such an integrated view into drivers’ data are unparalleled.
A strong product and hook will only get you so far. While it might get you that initial traction and that first critical mass of customers, exceptional founders are what turn that initial mass into a self-sustaining and continuously growing following. That is undoubtedly what Moove has in Ladi and Jide. Ladi’s global vision and unique ability to dream up new products combined with Jide’s fluid capacity to put pen to paper and create a plan around that vision completely convinced us of Moove’s ability to execute in the long-term. Their electric and contagious energy had us hooked from the very first call.
As Ladi will be the first to tell you, the opportunity is not restricted to car financing but can extend beyond to buses, trucks or even delivery bikes. With Uber’s exclusive partnership, they can easily scale the concept across markets primed for growth all over the world while having a positive impact. Moove is committed to ensuring 50% of their customers are women and 60% of their loans are used to purchase EV or Hybrid vehicles.
We are extremely excited to be part of Ladi and Jide’s journey to redefine mobility Fintech beyond ride-hailing and can’t wait to see what they dream of next. All of us at Speedinvest are incredibly happy to be leading the round with Left Lane in backing Moove for years to come!
We are ready to Moove!