South African car subscription service Planet42 raises $100 million in equity and debt

Image credits: Planet 42

Planet42, a South African-based car subscription company that buys used cars from dealers and leases them to customers using a subscription model, has raised $100 million in equity and debt from a wide range of investors.

Naspers, through its early-stage investment vehicle Naspers Foundry, co-led the $15 million equity round (the SA-based investor also led Planet42’s earlier $30 million round at the end of 2021) together with ARS Holdings. The capital round welcomed participation from existing and new shareholders, including Rivonia Road Capital; the Los Angeles-based global alternative asset manager provided a $75 million credit facility. Planet42 also received $10 million in debt financing from private investors.

According to the company, the new financing, consisting of equity, credit facility and debt, will rapidly expand its business and provide one million cars worldwide to people excluded from traditional car financing.

So far, the mobility startup founded in Estonia that offers car rental subscriptions has bought more than 12,000 cars for its customers in South Africa and Mexico. When co-founder and CEO Eerik Oja spoke to TechCrunch in an interview in December 2021, Planet42 claimed to have delivered more than 7,000 cars to customers in South Africa; according to a statement released by the company, this bought more than 5,000 vehicles in the African country in the last 12 months. Also, the six-year-old mobility startup started an expansion campaign in Mexico last year and has delivered 250 cars to its customers.

Planet42 says its expansion into Mexico is part of its strategy address transport inequality on a global scale. Only half of the world’s urban population has adequate access to public transport, according to the UN, and many of those excluded from access to reliable public transport are salaried workers in emerging markets who, despite having bank accounts and income stable, they cannot get financing from traditional financial institutions to buy their own vehicles.

In South Africa, 70% of vehicle finance applications are rejected by banks, according to Cars.co.za, Planet42 dealers, which have increased from 700 in 2021 to 1,000 dealers, report rejection rates of up to 90%. Planet42 is one of the few entrants, like Moove, Autochek and FlexClub, focused on the African market by addressing this inequality through different mobility offers.

For Planet42, it uses proprietary scoring algorithms to assess risk in underbanked customer segments. And with its algorithms, customers can find out what budget suits them and choose new or used cars from Planet42’s dealer network. After that, Planet42 buys the car and rents it to the subscription customer. Planet42 claims that of all customers served to date, 89% would not have had any other means of access to a personal vehicle. Dealers in Planet42’s South African network have reported an average increase in sales of 26% since becoming partners, the company said in a statement.

“Safe and reliable transport is a key driver of social and economic inclusion in emerging economies. It allows people to access opportunities like work, education and public services more easily when public transport is often unreliable, painfully slow, unsafe, and usually all of these things at the same time,” said Oja, who founded Planet42 with the financial director Marten Orgna, in a statement.We’re here to make transportation more accessible and we’re constantly working to make Planet42’s car subscription offering accessible to people unfairly overlooked by the banks.”

The company has raised more than $150 million in equity and debt from investors such as Naspers, Change Ventures, Startup Wise Guys, Martin Villig (Bolt), Ragnar Sass (Pipedrive) and Andrew Rolfe. this certified as carbon neutral by 2021. According to Daniel Zinn, the founder and managing partner of Rivonia Road Capital Rolfe, one of Planet42’s newest investors, “Rivonia Road is thrilled to partner with Planet42 by providing the capital needed to address this market inefficiency and help democratize access to mobility for thousands of underserved consumers around the world.