Photo: Planet42 team
Planet42, a South Africa-based car subscription company that buys used cars from dealerships and rents to customers via a subscription model, has raised $30 million in equity and debt. The investment — which co-founder and CEO Eerik Oja called a bridge round — is a prequel to a larger Series A round next year. It comprises $6 million equity and $24 million in debt financing.
The company raised $2.4 million in a seed round in June 2020 and followed it with $10 million in debt from emerging markets-focused venture debt fund Lendable in December. The fund doubled its participation in this recently raised debt round at $20 million, while other investors completed the rest.
Naspers, through its early-stage investment vehicle, Naspers Foundry, led the equity round with $3.4 million. Existing investors include Change Ventures
, the lead investor from Planet42’s seed round, as well as Startup Wise Guys, Martin and Markus Villig of Bolt, and Ragnar Sass of Pipedrive.
Planet42, though based in South Africa, has Estonian roots due to the founders’ heritage: Oja and CFO Marten Orgna
founded the company in 2017. In an interview, Oja mentioned that they created the car subscription model to cater to private individuals ignored by South African banks when they need vehicle financing.
Planet42 is one of the few upstarts focused on the African market tackling this inequality via a car subscription offering. The company claims to use proprietary scoring algorithms superior to traditional credit scores in assessing risk in underbanked customer segments.
The company has over 700 dealerships. And with its algorithms, customers can find out what budget suits them and choose new or pre-owned cars from Planet42’s dealerships network.
After that, Planet42 buys the car and rents it out to the customer on a subscription basis. Planet42 claims that of all the customers served so far, 89% would have had no other means of gaining access to a personal vehicle.
“We’ve gotten so good with our scoring that we can now enable the customers who couldn’t get bank financing to get a brand new car. We have figured out a way how to do it sustainably that we can put entry-level brand new cars in the hands of the same target market and customers who are unfairly ignored by banks,” the chief executive said.
Four years later and $50 million in equity and debt raised later, Planet42 has listed more than 7,000 cars to customers in South Africa. This number was 3,000 when Oja spoke with TechCrunch in March, and he noted that the company grew 25% month on month in 2021.