Naran raises $10m to expand vehicle financing across Africa

For someone working as a ride-hailing or delivery driver, getting access to a car or motorcycle is often the first problem to solve. Naran is building its business around that problem. The mobility finance startup has raised $10 million in debt and equity financing from Landel as it looks to finance more vehicles and expand into new markets. Naran currently operates in Senegal, Côte d’Ivoire, Colombia and Peru, with Paraguay next on its list. The company is also considering further expansion across Africa and the Middle East and North Africa region.

Naran’s rent to own model

The company buys cars and motorcycles from manufacturers and makes them available to drivers through a rent to own model. Drivers then pay for the vehicle over a period of between 12 and 60 months. The vehicles are used for ride-hailing and delivery work, with Naran working with platforms such as Yango and inDrive. The appeal is fairly obvious. A driver does not have to find the full cost of a vehicle before starting work. But the model also depends on the numbers working for both sides. The driver needs enough income from the vehicle to keep up with repayments, while Naran has to manage maintenance, insurance, vehicle values and missed payments.

It wants other fleets to use its software

Naran has also built software to manage the vehicles and drivers on its platform. The system covers areas such as driver onboarding, payment collection, vehicle tracking and maintenance. The company now wants to make this software available to other fleet operators. That gives Naran another route to grow without having to finance every vehicle itself. A fleet operator could use Naran’s technology to manage its vehicles, while Naran could provide financing for operators looking to add more vehicles.

There is a fintech angle too

The vehicle is also giving Naran something else: a regular financial relationship with the driver. As drivers make payments, Naran builds up information about how they manage the financing. The company says it wants to use this data to develop an asset backed financing platform for emerging markets. That could eventually take Naran beyond vehicles, although there is still a lot that has to work before that becomes a major part of the business. For now, the priority is putting more vehicles on the road and making sure the financing model works as Naran moves into more countries.

Africa’s mobility finance market is getting crowded

Naran is not the only company targeting drivers who need vehicles to earn a living. Moove has built a similar business around financing vehicles for mobility workers, while other fintechs are looking at ways to provide credit to people who have traditionally struggled to access bank financing. The difference with Naran is that it is combining the financing business with its own fleet management technology. Its latest funding gives it more room to test that model in new markets. The real challenge will be whether Naran can keep the vehicles earning, keep drivers paying and make the business work across very different markets. For a startup in a capital heavy business, that will matter much more than the size of the funding round.