Kenyan automotive marketplace Peach Cars is announcing its $5 million seed round led by Japan-based The University of Tokyo Edge Capital Partners (UTEC) and other angel investors, including Shintaro Yamada (founder and CEO of Mercari), Peter Kenevan (VP, Head of Japan at PayPal), and Hiroaki Ohta (general partner at Japan’s Waseda University Ventures).

The startup, founded by Kaoru Kaganoi and Zachary Petroni in 2020 to democratize car ownership in sub-Saharan Africa, starting with Kenya, will use the money to grow the business, hire more talent and double down on R&D as it expands its tech solutions, according to a statement.

In an interview with TechCrunch, Peach Cars’ founders narrated how more than a decade of combined experiences living in sub-Saharan Africa and talking with friends and industry peers made them see an opportunity in Kenya’s used cars market. According to CEO Kaganoi, unlike in Japan, trusted second-hand items marketplaces in Kenya were few and far between. The existing ones, however, lacked price transparency and were riddled with information asymmetry, fraud, non-secure payments and awful customer experience.

“I struggled to get affordable second-hand items, including furniture and electronics, when I moved to Kenya,” said the CEO. “I also struggled to find good condition vehicles as well as there are no established inspection methods and service providers, and you need to know a good mechanic yourself to get these quality checks done at a personal level.”

But before launching Peach Cars, the founders had to consider certain factors. To grow and build marketplaces, it’s paramount to check for the viability of such a market and if the unit economics makes sense. Also, the importance of establishing operations cannot be overemphasized. To accomplish that with commission-based businesses, Peach Cars understood that it needed to aim for high-value asset classes in Kenya. It also helped that both founders have experiences in the mobility space, with stints at ride-sharing app-cum-super app SafeBoda where they worked as operators.

Kaganoi, in the interview, also pointed out that while there’s a widely held notion that Africans, due to living in a “satchetized” economy, make small purchases without thinking much about the process and outcomes, spending a minute in a mall in Africa gives a different perspective where you find people caring about the experience. “The idea is why can’t we give everyone, whether you’re buying a car for $4,000 or $40,000, the same experience: a delightful one,” the chief executive explained.

Additionally, Kaganoi noted that Africa’s young population and booming middle class have yet to establish a strong relationship with automotive mechanics and are looking for convenient customer-centric and trusted services to meet their needs. He stated that Peach Cars was accordingly founded to bring transparency and a better experience to Kenya’s car ownership and maintenance process.

The company claims to have developed a smart engine check device that utilizes Peach’s proprietary built software to automate its car inspection process. The 225-point inspection system, benchmarked against Japanese auto industry standards, as 80% of cars in Kenya are of Japanese make, gives a complete and accurate report of all the systems in the vehicle.

Peach Cars is similar to Autochek and Moove, larger African mobility startups whose pitches revolve around car ownership and automotive repairs (in Autochek’s case). However, they differ in that Autochek and Moove are more on the asset financing and management side with B2C or B2B2C models, while Peach is a pure C2C marketplace like Jiji. According to Petroni, Peach has an edge over Jiji because it educates users on the car ownership lifecycle, has faster discovery processes with better transaction and payment management and, most importantly, car maintenance and servicing.

“Customers would like to find truthful and transparent ways to maintain their vehicles; hence Peach is accommodating its needs by providing the car care service,” the COO said. “Peach can leverage its inspection methods and information for the better diagnosis of the vehicle and the quality assurance of the fixes made on vehicles.”

The car marketplace collects service fees and commissions on successful transactions between sellers and buyers. It gets additional revenue streams from providing value-added services, including administrative work for transactions on agreements, inspections, change of ownership, secured payments and handovers. As a result, Peach – which has sold “hundreds of cars” and is looking to launch a near-fully automated inspection center in 2024 – currently generates over $200,000 in GMV monthly, 10x its numbers from two years ago when it was launched, according to its founders.

“Peach is pioneering the most customer-centric, trustworthy, and advanced used-car platform in Sub-Saharan Africa by coupling their operational excellence with smart IoT devices and data analysis,” Kiran Mysore, Principal at UTEC, who joined the startup’s board, said on the investment. “UTEC is proud to partner with Peach and foster the Japan-Africa collaboration by augmenting Peach with Japanese automotive expertise and network.”