Planet42, a South African car subscription company, has raised $30 million in equity and debt to aid in its expansion efforts. The company buys used cars from dealerships and rents to customers via a subscription model, also offering a rent-to-buy option. CEO Eerik Oja has said that this is a bridge round, merely a prequel to a larger Series A investment round expected in 2022.
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Of the $30 million raised, $6 million came from equity while the other $24 million came from debt financing. The company raised $2.4 million in a seed round in June 2020 and followed it with $10 million in debt from emerging markets-focused venture debt fund Lendable in December. Lendable supplied $20 million of the debt financing this time around.
Naspers, through its early-stage investment vehicle, Naspers Foundry, led the equity round with $3.4 million. 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.
“Our car subscription model is socially inclusive. For us, the differentiating factor is our customers would not have a car without us,” Oja said. “Because the company is buying second-hand cars, the unit cost is lower compared to a subscription model that purchases new cars.”
Planet42 is one of the few upstarts focused on the African market tackling this inequality via a car subscription offering. The company claims to use proprietary scoring algorithms superior to traditional credit scores in assessing risk in underbanked customer segments.
“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,” the CEO said.
