Planet42, a South Africa-based car subscription company has raised $30 million equity round led by Naspers Foundry, alongside existing investors Change Ventures and Startup Wise Guys.
Founded by Marten Orgna and Eerik Oja in 2017, Planet42 addresses transport inequality by offering an inclusive car subscription service to customers who typically cannot access traditional bank credit. In emerging markets, including South Africa, vehicle finance – and therefore vehicle ownership – is out of reach for most low and middle-income earners.
So far, the company has bought nearly 3,000 cars in South Africa and plans to increase this number to 100,000 in the next few years — and 1 million cars globally by 2025.
In addition to its rapid growth in South Africa, Planet42 recently bought its first cars for clients in Mexico, a country of over 128 million people who face similar challenges stemming from transport inequality. A high proportion of Mexico’s population are under-banked, with limited access to credit due to a high reliance on cash only transactions.
Meanwhile, on possible African expansion, Eerik Oja, CEO and Co-founder of Planet42 told TechCrunch that, "We’re just not doing it right now, but we’re not ruling it out for the future, However, the main reason is market size. South Africa has like 25% of all the passenger cars on the African continent; that means that whatever market we go next in Africa will necessarily be smaller than South Africa"
"In South Africa, 1.1 million second-hand cars get sold and bought every year. In Mexico, that number is 7 million. So the Mexican market is six times larger than South Africa. So we want to go for the really big markets".
The secured funds [comprising $6 million equity and $24 million in debt financing] will be used to expand Planet42’s car inventory in both South Africa and Mexico, putting the company on track to achieve its ambitious global goal of providing 1 million cars to people facing transport inequality by 2025.
"This funding is further proof that we’re on the right path in fighting transport inequality and promoting financial inclusion", Eerik Oja, CEO and Co-founder of Planet42, said. According to Oja, "Planet42’s car subscription model is unique because we focus on the underbanked customer and the second-hand car. This has allowed us to outperform peers who operate in markets like Europe and the US, where car subscription is a solution to a problem that doesn’t really exist – most people can get a bank to buy a car for them".
Planet42’s proprietary scoring algorithms are the foundation from which the company is able to bridge this lending gap responsibly, using a wider range of data sources than traditional credit scores to assess risk in the underbanked customer segment. These algorithms determine a suitable budget for each customer and, based on this, subscribers can choose any new or pre-owned car from Planet42’s network of more than 700 local car dealerships. Of the customers served so far, 89% would have had no other means of gaining access to a personal vehicle.
Building on its growing mobility portfolio, which includes WhereIsMyTransport, Autotrader and OLX Autos, Nasper is optimistic about this investment. "We are delighted to be the first South African investor supporting Planet42 with its next phase of growth. Planet42 is an innovative solution to addressing transport inequality in South Africa and beyond and has the potential to unlock further economic participation", Fabian Whate, Head of Naspers Foundry, said.
"This fits in with our focus of backing purpose-driven technology businesses. Investing in Planet42 is consistent with the portfolio we’ve built to date and Naspers Foundry’s healthy pipeline of potential future investments", he added.