Planet42 Raises $10m Debt Round from Lendable to Help the Underbanked Access Personal Vehicles

Planet42, an Estonian car subscription company that helps individuals ignored by banks to get access to a personal vehicle, has announced a $10m raise from US-based Lendable Inc, an institutional debt investor. To date, Planet 42 has bought and delivered over 2,000 second-hand cars in South Africa, its primary market.

“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% 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,” states Eerik Oja, the CEO and co-founder of Planet42.

Planet42 uses a proprietary scoring algorithm to automatically assess the risk of individual customers. If the decision is favourable, the customer will choose a suitable car from any dealership that Planet42 has partnered with. The company then purchases the car from the dealership and rents it to the customer on a subscription basis. The assets are secured with tracking technology, as well as comprehensive and mechanical insurance.

Compared to Europe and North America, personal vehicle ownership in Africa, Latin America and Asia is far lower. Banks in these regions approach risk assessment conservatively, viewing the majority of the population, even those with a stable income, as unworthy of financing for a personal vehicle. Instead, these banks focus on easy-to-assess, wealthier customers and newer cars.

California-based Sherpa Ventures Launches $1m Basecamp Fund for African startups

To compound this issue, in many emerging economies public transport is often lacking or dysfunctional, if not outright dangerous. People who do not own a personal vehicle often face disadvantages when it comes to education and employment options, making it harder to build wealth. This, in turn, makes them less creditworthy in the eyes of the banks. Planet42 aims to break this vicious cycle of financial exclusion by providing accessible personal vehicles on a subscription basis, and helping to unlock social mobility with increased physical mobility.

The $10m debt financing follows a $2.4m seed raise in early 2020, in a round led by Change Ventures. 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. This takes the total amount of capital raised to $20 million.

“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,” states Hani Ibrahim, Chief Investment Officer at Lendable.

Planet42 aims to use the new backing to scale its South African operations with the goal of purchasing 100,000 cars by 2024. The company is also considering options to expand into other emerging markets and plans to raise a Series A round in 2021.