South Africa-based fintech startup Planet42, which focuses on providing access to mobility to the underbanked, has raised US$2.4 million in funding to help it continue to grow.
Launched as CarGet in 2017, Planet42 partners with dealerships across South Africa to offer access to a personal car to its largely underbanked clientele.
The startup uses an automated scoring algorithm to process client applications based on credit bureau, affordability, and alternative data. If the application is approved, Planet42 analyses the customer’s validation documents before purchasing the car from the dealership and renting it to the customer. The asset is secured with tracking technology, as well as comprehensive and mechanical insurance.
So far nearly 2,000 vehicles have been delivered to clients this way, with Planet42 growing eight-fold in 2019, and it has now raised funding to help expand further. The US$2.4 million seed round was led by Change Ventures, with private backers including Martin Villig of Bolt, Ragnar Sass of Pipedrive, Marko Virkebau of MeetFrank, Kristjan Vilosius of Katana MRP, and several other Estonian tech entrepreneurs.
Planet42 will use the funds raised to keep expanding its portfolio of vehicles. The startup is targeting a total of 100,000 cars by 2024 in South Africa alone.
“Having a personal vehicle is a necessity in South Africa, as public transport is underdeveloped while ride-hailing is prohibitively expensive for most. A family car can be a lifesaver, but banks focus on newer, expensive vehicles and only approve 15 per cent of car financing applicants. This leaves few alternatives to lower- and middle-income households,” said Eerik Oja, co-founder and chief executive officer (CEO) of Planet42.
“We see a huge need for people to improve their standards of living with better mobility, but a lack of options in the market to service them. More than 24 million people are credit impaired or have no access to finance in South Africa – that’s well over half of the adult population.”
The startup is also looking at international expansion across key emerging markets, where it will be offering motorcycles and other types of mobility, alongside cars.
“We want to help people across the world commute with ease, earn more and feel secure. No one deserves to be deprived of the opportunities something as basic as a personal vehicle brings,” said Oja.
Rait Ojasaar, partner at Change Ventures, said his company saw global potential in the Planet42 solution.
“There are multiple markets in Latin America, Africa and South-East Asia with similar pain points – poor public transport, limited access to credit, and long commutes. Fintech has the potential to make a huge positive impact on how people get from A to B in these places, and we are proud to back Planet42 in making it a reality,” he said.