A start-up of an auto firm has promised to build Africa’s cheapest car in Thika has received undisclosed capital from US billionaire Ronald Lauder.
Mr Lauder, whose worth is estimated at $3.8 billion (Sh330 billion) by Forbes magazine, will offer Mobius an undisclosed convertible debt to help it assemble the first 50 units this year and establish a distribution network.
The cash will be provided through Lauder’s Pan African Investment Company (SPIC), which is headquartered in New York and invests in African firms that provide solutions to the continent’s problems.
The car, dubbed Mobius, will cost $10,000 (Sh870, 000) and is designed for off-roading in Africa and stripped of extras such as air conditioning, power steering and many internal fixtures.
“PIC is pleased to be working with Mobius to help create value in the company while driving job growth and entrepreneurism in Kenya,” said Dana Reed, the chief executive officer of PIC.
A convertible debt is a loan that can be turned into equity or stock ownership at a future date. Savvy startup investors prefer it because it’s a way of securing investment funds without setting a valuation on a company—a difficult process for pre-revenue company.
Ms Reed will sit in the board of Mobius Motors, the brain child of computer engineer Joel Jackson, 29, who has picked Thika-based Kenya Vehicle Manufacturers (KVM) to assemble the units. SEE MORE AFTER CUT>>>>>>>
The start-up says it has received pre-orders for Mobius and will develop an upgraded car dubbed Mobius III, which is set for production launch in 2016.
“We are excited to apply the world-class business experience of Ronald Lauder and Richard Parsons to the future growth of Mobius in Africa,” said Mr Jackson. Mr Parson is also a founder of PIC and former chair of Citigroup and CEO of Time Warner, which owns CNN.