South Africa’s Planet42 gets $30M for Its Car Subscription Service, Mexico Expansion

South Africa’s Planet42 gets $30M for Its Car Subscription Service, Mexico Expansion

Planet42, a vehicle subscription company located in South Africa that buys secondhand cars from dealerships and rents them to consumers on a monthly basis, has secured $30 million in stock and debt. The investment, dubbed a bridge round by co-founder and CEO Eerik Oja, is a precursor to a bigger Series A deal later this year. It has a $6 million equity component and a $24 million loan component.

In June 2020, the firm secured $2.4 million in a seed round, followed by $10 million in loans from Lendable, an emerging markets-focused venture debt fund, in December. The fund increased its stake in the previously funded debt round to $20 million, with additional investors filling in the gaps. Naspers Foundry, the company’s early-stage investment entity, led the equity round with $3.4 million. Change Ventures, the main investor in Planet42’s seed round, as well as Startup Wise Guys, Martin and Markus Villig of Bolt, and Ragnar Sass of Pipedrive, are among the existing investors.

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South Africa’s Planet42 gets $30M for Its Car Subscription Service, Mexico Expansion

Despite its South African location, Planet42 has Estonian origins according to the founders’ heritage: Oja and CFO Marten Organ started the firm in 2017. In an interview, Oja stated that the automotive subscription model intended to appeal to private persons who were overlooked by South African banks when seeking vehicle finance. “Our automobile subscription [model] is inclusive of all social groups. The unique aspect for us is that our clients would not have a car if it weren’t for us,” Oja said, adding that because the firm buys used automobiles, the unit cost is cheaper than a subscription model that buys new cars.

In most emerging countries, getting a personal automobile might be difficult, especially if one’s income is not steady. Lenders prefer to disregard persons with weak credit or charge them unfavorable interest rates for auto financing if they do not have a solid credit history. Planet42 is one of the only start-ups focusing on the African market that uses a car subscription model to address this disparity. In measuring risk in underbanked consumer sectors, the business claims to apply unique scoring algorithms that are superior to standard credit ratings.

There are nearly 700 dealerships in the firm. Customers may use its algorithms to figure out what budget works best for them and then pick from Planet42’s network of dealerships for new or used automobiles. Planet42 then purchases the vehicle and leases it to the user on a subscription basis. Planet42 states that 89 percent of consumers serviced so far would not have had access to a personal vehicle otherwise.

“We’ve grown so proficient at scoring that we can now acquire brand new cars for people who couldn’t get bank financing.” We’ve found out a method to do it in such a manner that we can put brand new entry-level automobiles in the hands of the same target market and consumers who are unfairly rejected by banks,” stated the CEO. Planet42 has offered over 7,000 automobiles to clients in South Africa four years later, after raising $50 million in stock and debt. When Oja talked with TechCrunch in March, the firm had 3,000 employees, and he said that in 2021, the company expanded 25% month over month.

Other firms in Sub-Saharan Africa that provide comparable services include Autochek and Moove. While Moove focuses on ride-hailing automobile finance, Planet42 and Autochek cater to private consumers. On its platform, Planet42 has a coherent network of car industry players. After debuting in Nigeria, both Moove and Autochek have expanded into other African nations. However, Planet42’s next lucrative market is located off the coast of Africa.