[Funded Series] Strategic Insight On How Well Cars45 is Faring With Their $5 Million Funding.

I have to admit that my curiosity always gets the best of me when it comes to business growth analysis (especially for startups that have been funded).

So I decided to do some poking around into startups that have raised over a million dollars because I have a simple philosophy and that is…

Don’t be too gullible…

Don’t be too quick to swallow what people say, watch what they do and you’ll be better informed.

And this applies to all areas of your life, but I want to focus on business.

No doubt the COVID-19 pandemic will definitely have an impact on all businesses across the board but it also presents an unprecedented opportunity as well.

I published an article here previously on the importance of having leverage in your business, Other People’s Time(OPT), Other People’s Money(OPM), Other People’s Resources (OPR) etc.

And getting funded is a good leverage you might need…

Thus, I want to know what these funded companies are really doing with the leverage they have (and quite frankly I think you should want to know as well).

And that’s why I decided to launch the Funded Series, who knows you might need funding for an idea you have or might soon have…

Having said that shall we begin…?

Our first stop is Etop Ikpe’s Cars45.

Cars45 is an automobile trading platform that helps customers buy, sell or swap pre-owned automobiles.

Alright…let me give a little background to the story.

So, Cars45 got started in 2016, and in 2017 they acquired a $5 million Series A funding from Frontiers Cars Group.

However, that’s not all…

You see Frontier Cars Group is a Berlin-based startup that launches and operates used-automotive marketplaces within emerging markets economies with operations in Mexica, Chile, Argentina, Colombia, Pakistan, and Indonesia.

These countries all have similar market dynamics as Nigeria.

In addition, Frontier Cars Group has the backing of some really big investment players such as Balderton Capital (with total assets of $2.2 billion), TPG Growth (with total assets of $103 billion), NEA (with total assets of $20 billion) and Echo VC.

There’s another thing you should know…

The cars45 has a great team with a good wealth of experience and this is important in boosting confidence in an investor.

Etop Ikpe has a very strong e-commerce background having held the position of VP Operations and then Co-MD at Dealdey for 2 years before it was acquired by Ringier in 2016. He then went on to become the Commercial Director at Konga before launching Cars45.

Iyamu Mohammed has a very good background in the ecommerce space as well, having held the position of Head of Operations at Carmudi for almost 2 years helping out with the systems and KPIs.

Sujay Tyle was most recently a partner at Kingsway Capital, a London-based emerging-markets focused fund. Prior, he was on the founding team of Hired.com (a talent marketplace) as its COO. Hired has now raised $53M in funding and operates in Australia, Europe, and the US. Before Hired, Sujay was VP of Business Development at Scopely. Sujay entered Harvard at age 15, before leaving with a Thiel Fellowship. Sujay was named one of Forbes’ 30 under and one of Goldman Sachs’ top 100 intriguing entrepreneurs.

Peter Lindholm was formerly working within Kinnevik companies for last 6 years (Millicom, MTG, Qliro Group, Rocket Internet). Peter managed the $195M investment into Rocket Internet and was a part of management teams in different roles for multiple small launch-stage and large ventures ($3-150M revenues) in both developed and developing markets. He has been launching and setting up teams since he was 18.

Let’s talk about the business model…

The business model is It’s pretty much similar to that of Airbnb...

Where a buyer, seller or someone who wants to swap a car can shop for the best deal within their budget and Cars45 gets a percentage from each transaction.

Okay, I’m going to go the extra mile and show you what their process looks like and this is important because without an efficient process you can’t scale up

With all that knowledge, it would be good to add that Cars45 is not actually the first to play in this space. Cheki.com.ng actually started out back in 2010 but was later acquired by Ringier for an undisclosed amount in December of 2017 as well as Carmudi which later became Jumiacar (which I wouldn’t talk about in this article).

There is speculation that Cheki has an estimated annual revenue of $4.5 million but somehow that doesn’t seem to show up in the number of downloads they have in playstore compared to Cars 45.

But they do seem to have a much higher average monthly website visits than Cars45.

No pressure though because the market is big enough for both players

According to Owler.com, Cars45 claims to have estimated annual revenue of about $2.5 million (we’ll verify this claim in a bit…keep reading).

As usual, I got curious, and I wanted to know what they really doing, and to get an idea I like to take a look at their numbers.

Let’s start with the Cars45 app, as you can see the app was released in Google Playstore on Dec. 16, 2016, and in istore on July 20, 2017.

And they have over 10,000 downloads on android devices and [number of downloads].

We all know that business is a game of numbers and the more people we get to engage with the top of our funnel the more the chances of closing a sale.

So, the more people land on their site or download the app and register the better the chances of more scheduled appointments (this is actually an inspection visit to their centers to either sell, buy or swap a car), and that will in turn increase the number of sales.

For every business it always starts with awareness and Cars 45 is no different, and awareness basically is getting people to know about you and engage with your brand.

Cars45 actually does a lot of online marketing with direct at 45.56% and search traffic at 36.44% accounting for a huge chunk of the traffic.

We all know how powerful Google search engine is, as it accounts for over 80% of all searches made online and as you can see 36.44% of Cars45 traffic come from online searches with 96.38% Organic and 3.62% Paid.

In the midst of all this only one traffic sources matter the most in relation to revenue generated and that is email which accounts for 8.77% of the traffic (hold that in mind and we’ll come back to it).

But it gets more interesting when you see the all the numbers come together in the diagram below.

Now, it is vivid that they get an average website/app monthly visits of about 349,660, and their average time spent is over 10minutes which is really amazing because it shows that people are actually shopping, the more time spent the more chances of getting a sale.

But let’s break it down further.

Based on the analogy I gave earlier on how business is a game of numbers and conversion rate varies from industry to industry, but according to stats, the average website conversion rate global benchmark across industries is about 2.35%.

In other words, a 2.35% conversion rate would mean that for every 100 people that take a particular action, about 2 people out of that initial number take the next action.

So, if we exclude the traffic from emails (which are people that are already subscribed), we’ll have a clear picture of how it works.

Let’s do a quick math…

If emails account for 8.77% of the total traffic which translates to about 30,665, so to give us an idea of the unsubscribed, we’ll subtract that from the total number.

Total No. of Unsubscribed Visitors = Total Traffic – Email Traffic

                                               = 349,660 – 30,665

               Total No. of Unsubscribed Visitors = 318,995

But we know that people only highly interested people buy from you and there’s no better to identify indicated interest than through emails.

In other words, these are the people that have given you permission to sell them on what you have to offer by giving you their details (name, email address and phone number).

That is the GOLD MINE.

So at a 2.35% conversion rate, for every 318, 995 visitors that hit the Cars45 website they get about 7,496 people to subscribe.

Now, let’s get back to the revenue…

If you’re acquainted with email marketing, there are two key metrics you should take note of and that is open rate and click-through rate.

Open rate: the percentage of emails sent out that are opened by subscribers.

Click-through rate: the percentage of emails opened that are clicked by subscribers.

Given that the global benchmark for click-through rate at 2.69% and the length of time they have been in business we can estimate they have a list size of between 100k - 500k subscribers.

If the average amount spent on a car is about NGN 750,000 and we have about 1% of the total number of traffic from emails at 30,665 which translates to 306 sales.

Then we could be looking at an average monthly revenue in the neighbourhood of NGN 229,500,000 (at an exchange rate of NGN 365 to $1 it comes to $ 628,787) and average annual revenue of NGN 2,754,000,000 (at an exchange rate of NGN 365 to $1 it comes to $ 7,545,205).

So if you were an investor and someone brought an idea that needed about $ 5million with a potential of generating $ 7,545,205 in less than 5 years would you invest in it?


If you have an idea that needs funding I suggest you read this post and download the Investor Pitch Deck Template here.

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