South Africa’s Car Subscription Service Planet42 Raises $30 Million In Equity And Debt

South Africa’s car subscription company Planet42 has raised the sum of $30 million in equity and debt in a round described by CEO Eerik Oja as a bridge round. The round can be likened to a pre-Series A round, as the company plans to have a bigger Series A funding round by next year.

Planet42 which is a car subscription company that purchases used cars from dealerships and rents to customers via a subscription model, raised $6 million in equity and $24 million in debt financing.

The funding round was led by Naspers Foundry, Naspers early-stage investment fund. The company led the equity round with $3.4 million. Other investors that participated in the funding round include Change Ventures which led Planet42’s seed funding round, Startup Wise Guys, Martin and Markus Villig of Bolt and Ragnar Sass of Pipedrive.

The funding round follows a seed round held in June that saw the startup raise $2.4 million and another $10 million in debt from venture debt fund Lendable in December that same year. Lendable also participated in this just-concluded pre-Series A round.

The startup was founded in 2017 by Eerik Oja and Marten Orgna who are of Estonian origin. According to the duo, Planet42 was founded to cater for private individuals who need vehicle financing and have been overlooked by South African banks. “Our car subscription [model] is socially inclusive. For us, the differentiating factor is our customers would not have a car without us”, Eerik Oja mentioned emphasizing that because Planet42 is purchasing only used cars, the unit cost is lower compared to a subscription model that purchases new cars.

The company is therefore one of the very few that are trying to tackle the challenge of getting a personal car in a space like Africa where people are mostly ignored because of no collateral, bad credit history, etc. The company claims to use proprietary scoring algorithms superior to traditional credit scores in assessing risk in underbanked customer segments.

Currently, Planet42 has more than 700 dealerships and using the algorithms it operates, customers can choose either new cars or used cars according to their budgets. The company acquires the car and then rent it out to customers on a subscription basis.

The company 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”, Planet42’s chief executive officer said.

Planet42 battles competition from other rivals such as Autochek and Moove who have solidified their positions in the African space. The company believes that it can thrive as there exist endless possibilities in the market it operates and plans to operate in the future.