Cars45 update; in the last week, we reported on a number of high profile exits in the online platform. Now we have some additional information on a dramatic week at the company
In the past week, Cars45, the platform that allows you to sell used cars online has been in the news. The company was in the headlines over the manner in which it announced the exit of 11 senior executives.
While on the one hand it chose a dramatic way to announce the 11 exits, one earlier exit which didn’t catch a lot of attention was that of the company’s CEO, Etop Ikpe.
Our theory at the time of our first article, was that the CEO, along with some of the 11 executives who left the company had gone on to form their own company. While the name of the new company has not been revealed, what passed under the radar are the changes that have happened at Cars45.
OLX’s venture arm invests in Frontier Car Group
Cars45 was founded by Etop Ikpe, Sujay Tyle, Iyanmu Mohammed and Peter Lindhom in 2016. In May 2017, it went on to raise $5m from FCG in a Series A round. That investment ensured that Cars45 was now part of the FCG. The FCG itself was founded in 2016 and is based in Germany.
FCG’s investment in Car45 was part of its plan to have a stronger presence globally. While the company started out operating from four countries, it went on to raise money for an expansion two years after launch.
In 2018, FCG raised $89 million from Prosus, a company which is the venture arm of OLX.
That expansion saw it grow its presence from 4 to 10 countries globally. In some of the countries FCG had expanded to, like Nigeria and Kenya, OLX had classified marketplaces where people could trade cars.
Its investment in FCG likely led to the decision to sell its assets in Nigeria, Ghana and Kenya to Jiji. This was also the clearest indication that OLX was looking to take on a bigger stake in the car trading platform.
OLX provides exit opportunity for early-stage investors
A year after its original $89 million investment, OLX considered its investment in FCG to be so important that it would take on a bigger role. Reuters quoted the CEO of OLX Group, Martin Scheepbouwer as saying, “they have blown all my expectations out of the water.”
In November 2019, the OLX Group injected $400 million in exchange for new shares and a tender offer to buy out existing shareholders. For early stage investors in FCG like EchoVC Partners and Partech Ventures, it was an exit opportunity.
“OLX Group will invest up to US$400 million, comprising a primary injection of capital in FCG and the contribution of OLX’s joint-venture shares in India and Poland, as well as the acquisition of shares held by other investors, founders and management, subject to a tender offer process. Regardless of the uptake by investors in the tender process, the transaction will result in OLX Group becoming the largest shareholder in FCG.” –OLX Group
But beyond that exit, there were some changes to FCG’s business. In Indonesia, BeliMobilGue, FCG’s Indonesian subsidiary as well as its Indian business will now be known as OLX Autos.
In Nigeria, there is no indication of a name change yet, and it is unclear whether that is on the cards for the future. What we can safely assume about the Cars45 is that the exit of its founders did not go as smoothly.
A possible fall-out over equity?
While all the parties involved declined to speak to TechCabal, what we know is that Etop Ikpe left the business in July 2020. Sujay Tyle, his co-founder also left the business in August 2020.
These exits on their own do not suggest anything out of the ordinary. However, a source who refused to speak on the record suggested that the exit of the Cars45 CEO did not go smoothly.
A source told TechCabal that a squabble over equity arrangements as well as a buy-out created a fragile situation.
Yet, that in itself would not be unusual. His exit, for whatever alleged intrigues it came with went under the radar. So why did the exit of 11 other members of the Cars45 team prompt the company to issue a public notice?
Another source close to the situation who also declined to speak on the record claimed that Cars45 CEO, Etok Ikpe, following his exit, has started a new venture.This new venture has now reportedly poached some of the executives of his former company.
Another source confirmed to TechCabal that the new venture is called Autochek, and it will reportedly operate in Ghana and Nigeria after buying Cheki’s business in both countries. At the time of this report, this claim has not been independently verified.
But one working theory is that while Cars45 was willing to let a fractious exit slide, someone at the helm of affairs thought that poaching executives was a step too far. For now these are only theories, it is unlikely that any of the parties will speak on the issues anytime soon.
When TechCabal reached out to Cars45 and Etop Ikpe, they refused to comment on any of these claims.