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.
“Our car subscription [model] is socially inclusive. For us, the differentiating factor is our customers would not have a car without us,” Oja said, adding that because the company is buying second-hand cars, the unit cost is lower compared to a subscription model that purchases new cars.
It can be challenging to get a personal car in most emerging markets, especially if one’s income isn’t stable. And without a good credit history, lenders tend to ignore people with bad credit or give them unfavorable interest rates for 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.
Source: El Financiero