South Africa’s Planet42 gets $30M for its car subscription service, led by Naspers

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.

Naspers, through its early-stage investment vehicle, Naspers Foundry, led the equity round with $3.4 million. It is the eighth investment in South Africa made by Naspers Foundry, which the technology giant established to invest in local early-stage technology companies.

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. The larger debt component of the deal was provided by existing debt investors, Lendable, an impact debt fund.

Planet42 offers a socially inclusive car purchase service

In emerging markets, including South Africa, vehicle finance — and therefore vehicle ownership — is out of reach for most low- and middle-income earners. This lack of access to reliable, efficient, and safe transport can present enduring obstacles, perpetuating inequality and restricting economic mobility. Access to a personal vehicle at an affordable price can be life-changing and a way to level up quickly.

Planet42 said 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,” CEO, Eerik 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.

Planet42’s proprietary scoring algorithms are the foundation from which the company can 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. Planet42 buys the car and rents it out to the customer on a subscription basis. The offering enables customers to either buy or return the car to Planet42 at any time. Of the customers served so far, 89% would have had no other means of gaining access to a personal vehicle.

According to the startup, the company recorded a 25% monthly growth rate in 2021 and claims that dealers who work with Planet42 experience an average increase in sales of 26%.

Since its founding in 2017, Planet42 has purchased more than 7000 cars for people who are unable to access traditional bank credit. The company recently opened an operation in Mexico, a country where a high proportion of the population is underbanked.

The funds raised through the latest equity and debt financing round 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 a million cars to people facing transport inequality by 2025”, it said in the statement.

South African Fintech startup, Planet42 receives $2.4M funding in a round led by Change Ventures