The South Africa-based Planet42, a car subscription company that helps individuals ignored by banks to get access to a personal vehicle, has announced a US$10 million debt funding round to help it scale its operations and move into new markets.
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.
To date, Planet 42 has bought and delivered over 2,000 second-hand cars in South Africa, and it now plans to purchase 100,000 cars by 2024 after raising US$10 million from the US-based Lendable Inc, an institutional debt investor. The company is also considering options to expand into other emerging markets, and plans to raise a Series A round in 2021.
“Our ambition is to make mobility accessible to everyone who can afford it, including the people that banks deem “blacklisted”, which comprise more than 90 per cent of our clientele. We’ve already signed up over 300 car dealerships across South Africa, but there are still several thousand to go. And that’s just the first market we have tackled. This round will open more doors in South Africa and beyond for us,” said Eerik Oja, the chief executive officer (CEO) and co-founder of Planet42.
The US$10 million debt financing follows a US$2.4 million seed raise earlier this year, in a round led by Change Ventures, and takes the total amount of capital raised to US$20 million. The debt facility reduces the relative cost base of Planet42, enabling the company to pass savings onto its customers and make the product accessible to even more people. Because Planet42 owns the vehicles and generates predictable revenues from its fleet, it is in a position to raise significant debt financing.
“Planet42 has proved its ability to grow even through the current pandemic. We fully share their mission of improving people’s lives through access to mobility, and are thrilled to provide backing to expand Planet42’s impact in South Africa,” said Hani Ibrahim, chief investment officer at Lendable.