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South Africa’s Planet42 gets $30M for its car subscription service, Mexico expansion – TechCrunch

South Africa’s Planet42 gets $30M for its car subscription service, Mexico expansion – TechCrunch
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Planet42, a South African-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 Eric Oga has dubbed the Bridge Round – is a precursor to a larger round of Series 1 next year. It consists $6 million in equity and $24 million in debt financing.

The company raised $2.4 million in an initial round in June 2020 and followed up with $10 million in debt from its emerging markets-focused venture debt fund Lendable in December. The fund doubled its participation in a debt round that was recently raised to $20 million, while other investors completed the rest.

Naspers led the stock round. Current investors include Change Ventures, the lead investor from the initial round of Planet42, as well as Startup Wise Guys, Martin and Marcus Village of Bolt and Ragnar Sass of Pipedrive.

Planet42, although based in South Africa, has Estonian roots due to the heritage of the founders: Oja and Chief Financial Officer Marten Orgna founded the company in 2017.. In an interview, Oja mentioned that they created the car subscription model to meet the needs of individuals who are ignored by South African banks when they need car financing..

Subscribe to our car [model] is being socially comprehensive. For us, the The distinguishing factor is that our customers won’t own a car without us, Oga said, adding that because the company buys used cars, the unit cost is lower compared to the subscription model that buys new cars.

It can be difficult to get a personal car in most emerging markets, especially if the individual’s income is precarious. Without a good credit history, lenders tend to ignore people with bad credit or give them unfavorable interest rates for vehicle financing.

Planet42 is one of the few startups focused on the African market that is addressing this disparity by offering a car subscription. The company claims that it uses proprietary scoring algorithms that are superior to traditional credit scores in assessing risk in underbanked client segments.

The company has more than 700 dealers. Using its algorithms, customers can find out what budget suits them best and choose new or used cars from Planet42’s dealer network.

Next, Planet42 buys the vehicle and rents it to the customer on a subscription basis. Planet42 claims that of all customers served to date, 89% had no other way to access a personal vehicle..

“We have done so well with our results that we can now enable customers who were unable to get bank financing to get a brand new car.. We’ve come up with a way to do it sustainably That we can put brand new entry-level cars into the hands of the same target market and customers unfairly ignored by the banks,” the CEO said.

Four years later, raising $50 million in equity and later debt, Planet42 has listed more than 7,000 vehicles for customers in South Africa.. That number was 3,000 when Oja spoke with TechCrunch in March, and noted that the company had grown 25% per month in 2021..

planet 42

Planet42 founders (Marten Orgna and Eerik Oja)

Autochek and Moove are two other companies that provide similar services in parts of sub-Saharan Africa. While Moove focuses on passenger car financing, Planet42 services and Autochek Targeted in individuals. Planet42 has a close-knit network of stakeholders in the automotive industry on its platform.

Moove and Autochek made their way to other African countries afterwards Initially Departure from Nigeria. But for Planet42, the next attractive market is outside the continent.

“they were Just Oja answered if Planet42 will expand to other parts of Africa. “However, The main reason is the size of the market. South Africa has like 25% of all passenger cars on the African continent. This means that any market we go to next in Africa will do that necessarily be smaller than South Africa. In South Africa, 1.1 million used cars are bought and sold each year. In Mexico, this number is 7 million. So the Mexican market is six times larger than South Africa. So we want to go to really Big markets.

The company said it bought its first cars for customers in Mexico. Similar challenges stemming from transportation inequalities abound in the country, where 63% of the population deals only with cash.

But Mexico is one of the few countries that Planet42 plans to expand into in the foreseeable future, said Uja, who also said the company has set up an office and has hired two employees.

He said the company hopes to purchase more than one million cars for its customers across its current and future markets by 2025. Planet42 said it has made great strides in becoming a carbon-neutral company with a wind farm project in the Northern Cape, South Africa. The car subscription company has financed the farm for months with money from carbon offset credits.

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