African tech investor Naspers takes R54 million bet on a car subscription platform, Planet42, that addresses transport inequality.
The investment is part of a R91 million ($5.8 million) equity round led by Naspers Foundry, alongside existing investors Change Ventures and Startup Wise Guys.
Existing debt investors, such as the impact debt fund Lendable, added a further R380 million ($24 million) of debt.
The investment in Planet42 is part of Naspers’s R1.4 billion commitment to grow South Africa’s early-stage tech ecosystem and the eighth investment since the launch of Naspers Foundry in 2019.
“At Naspers, we are passionate about building leading companies that empower people and enrich communities and we support Planet42’s mission to make a positive impact on people’s lives by addressing transport inequality, “Phuthi Mahanyele-Dabengwa, South Africa CEO of Naspers, said.
“This investment builds on Naspers’s growing mobility portfolio, which includes WhereIsMyTransport, Autotrader and OLX Autos, among others.”
Planet42 was founded in 2017 and addresses transport inequality by offering an inclusive car subscription service to customers who typically cannot access traditional bank credit. In emerging markets, including South Africa, vehicle finance – and therefore vehicle ownership – is out of reach for most low and middle-income earners.
This lack of access to reliable, efficient and safe transport can present enduring obstacles, perpetuating inequality and restricting economic mobility. Access to a personal vehicle at an affordable price can be life-changing and a way to level up quickly.
Planet42’s proprietary scoring algorithms are the foundation from which the company is able to bridge this lending gap responsibly, using a wider range of data sources than traditional credit scores to assess risk in the underbanked customer segment. These algorithms determine a suitable budget for each customer and, based on this, subscribers can choose any new or pre-owned car from Planet42’s network of more than 700 local car dealerships. Planet42 buys the car and rents it out to the customer on a subscription basis. The offering enables customers to either buy or return the car to Planet42 at any time. Of the customers served so far, 89% would have had no other means of gaining access to a personal vehicle.
“Having access to a personal car is arguably a needless luxury in London but could change your life in a city like Johannesburg. A personal car means that you can get to work reliably or you can apply for that job that is farther away from your home,” Eerik Oja, CEO and Co-founder of Planet42, said.
“Planet42’s car subscription model is unique because we focus on the underbanked customer and the second-hand car. This has allowed us to outperform peers who operate in markets like Europe and the US, where car subscription is a solution to a problem that doesn’t really exist – most people can get a bank to buy a car for them.
“This funding is further proof that we’re on the right path in fighting transport inequality and promoting financial inclusion.”
Since its founding in 2017, Planet42 has purchased more than 7,000 cars for people who are unable to access traditional bank credit. The simplicity and convenience of Planet42’s subscription model provides significant advantages over the traditional car retail approach for customers and dealers alike – dealers who work with Planet42 experience an average increase in sales of 26%.
In addition to its rapid growth in South Africa, Planet42 recently bought its first cars for clients in Mexico, a country of over 128 million people who face similar challenges stemming from transport inequality. A high proportion of Mexico’s population are under-banked, with limited access to credit due to a high reliance on cash only transactions.
The funds raised in this round will be used to expand Planet42’s car inventory in both South Africa and Mexico, putting the company on track to achieve its ambitious global goal of providing 1 million cars to people facing transport inequality by 2025.
“We are delighted to be the first South African investor supporting Planet42 with its next phase of growth. Planet42 is an innovative solution to addressing transport inequality in South Africa and beyond and has the potential to unlock further economic participation,” Fabian Whate, Head of Naspers Foundry, said.
“This fits in with our focus of backing purpose-driven technology businesses. Investing in Planet42 is consistent with the portfolio we’ve built to date and Naspers Foundry’s healthy pipeline of potential future investments.”