Planet42 South African Company Raised $30M for Its Car Subscription Service

Planet42, a South Africa-based car subscription company, which buys used automobiles from dealerships and rents them to clients on a subscription basis, has secured $30 million in debt and stock.

The investment, dubbed a bridge round by co-founder and CEO Eerik Oja, is a precursor to a larger Series A deal later this year. It has a $6 million equity component and a $24 million debt component.

In June 2020, the firm raised $2.4 million in a seed round, followed by $10 million in debt from Lendable, an emerging markets-focused venture debt fund, in December.

The fund increased its stake in the recently raised debt round to $20 million, with other investors filling in the gaps.

Naspers Foundry, the company’s early-stage investment entity, led the equity round with $3.4 million. Change Ventures, the main investor in Planet42’s seed round, as well as Startup Wise Guys, Martin and Markus Villig of Bolt, and Ragnar Sass of Pipedrive, are among the existing investors.

Despite its South African location, Planet42 has Estonian roots according to the founders’ heritage, Oja and CFO Marten Orgna started the company in 2017. In an interview, Oja stated that the automotive subscription model was intended to cater to private persons who are overlooked by South African banks when seeking vehicle financing.

“Our car subscription [model] is inclusive of all social groups.

“The interesting component for us is that if it weren’t for us, our customers wouldn’t have a car,” Oja said, adding that because the company buys old cars, the unit cost is lower than if it were a subscription model that bought new cars.

In most emerging markets, getting a personal car might be difficult, especially if one’s income isn’t steady. Lenders tend to disregard persons with bad credit or charge them unfavorable interest rates for vehicle financing if they don’t have a solid credit history.

Planet42 is one of the only start-ups focusing on the African market that uses a car subscription model to address this disparity. In measuring risk in underbanked consumer sectors, the company claims to apply proprietary scoring algorithms that are superior to traditional credit scores.

There are over 700 dealerships in the company. Customers can also use its algorithms to figure out what budget works best for them and then choose between new and pre-owned items.

Planet42 then purchases the vehicle and rents it to the customer on a subscription basis. Planet42 estimates that 89 percent of the customers it has served so far would not have had access to a personal vehicle otherwise.

“We’ve gotten so proficient at scoring that we can now get brand new cars for customers who couldn’t get bank financing.” We’ve found out a method to do it in such a way that we can put brand new entry-level cars in the hands of the same target market and customers who are unfairly rejected by banks,” stated the CEO.

Planet42 has offered over 7,000 cars to clients in South Africa four years later, after raising $50 million in equity and debt.

When Oja spoke with TechCrunch in March, the number was 3,000, and he said the company has grown by 25% month over month.

Autochek and Moove are other companies offering similar services in parts of sub-Saharan Africa.

While Moove focuses on ride-hailing automobile financing, Planet42 and Autochek cater to private consumers. On its platform, Planet42 has a cohesive network of automobile industry players.

After debuting in Nigeria, both Moove and Autochek have expanded into other African countries.

However, Planet42’s next lucrative market is located off the coast of Africa.

When asked if Planet42 might expand into other parts of Africa, Oja replied, “We’re just not doing it right now, but we’re not ruling it out for the future.” “However, market size is the primary cause.

South Africa accounts for around a quarter of all passenger cars on the African continent; this means that whichever market we visit next in Africa will inevitably be smaller. Every year, 1.1 million used cars are sold and bought in South Africa.

Mexico has a population of 7 million people. As a result, the Mexican market is six times larger than the South African market. So we want to go for the really big markets.”

The company said that it has purchased its first vehicles for clients in Mexico. Similar issues arising from transportation inequity abound in the country, where 63% of the population relies only on cash.

However, Mexico is one of the few nations where Planet42 aims to expand in the near future, according to Oja, who also stated that the firm has opened an office and hired two people.

By 2025, he said, the company wants to have purchased over 1 million cars for its clients in both current and prospective markets. Planet42 has also made progress toward becoming a carbon-neutral corporation, thanks to a wind farm project in South Africa’s Northern Cape. The farm was financed for months by the automobile subscription firm using money from carbon offset credits.


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Hassan Barakat
Hassan Barakat
Barakat Temitope Hassan is a competent and dedicated Radiographer who is also interested in Tech, Writing and Medical Research.

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