Startup of the Day: Planet42, Estonian-founded car subscription service provider

Founded in 2017, Planet42 is a mobility startup that offers rent-to-buy car subscriptions. Its model is based on utilizing a proprietary scoring engine and a network of car dealership partners to assess each customer’s risk level. Since its launching, the startup has partnered with about 1,000 dealerships across South Africa and provided more than 15,000 people with access to cars. To date, in total, Planet42 has raised $150 million in combined equity and debt funding. The latest $100 million round was raised in February this year.

In the Startup of the Day column, Eerik Oja and Marten Orgna, co-founders of Planet42, share more details about the startup’s idea, its product, and future plans.

The Startup of the Day column on AIN.Capital is dedicated to tech projects from all sectors that originated from the CEE countries. If you would like to introduce your project, please fill in the questionnaire.

Tell us about your startup. How does it work?

At Planet42, we offer rent-to-buy car subscriptions for customers who are often overlooked by traditional banks when it comes to vehicle financing. Without safe and reliable public transport, people in many parts of the world are denied fair and equal access to opportunities like jobs, education and public services. Our goal is to combat this transport inequality by putting cars in the hands of people who otherwise would not have had another option. Our model is simple; we utilize a proprietary scoring engine and a strong network of car dealership partners to assess each customer’s risk level. Based on this assessment, customers choose a car they like from a second-hand car dealership, and we buy that car and rent it out to them on a subscription basis (inclusive of rental, comprehensive insurance, and GPS tracking).

Unlike traditional financing schemes that have longer, more stringent contract terms that can go up to 7 years, our subscription contract is flexible, meaning that after the first six months, the customer can return the car to us anytime if they want to, or they can also buy out the car.

How did you come up with the startup’s idea? What was the reason/motivation behind it?

My co-founder Marten Orgna came up with the idea for Planet42 after realizing that most individuals with stable incomes in emerging markets like South Africa are excluded from the traditional lending landscape due to outdated criteria used by the dominant incumbent banks operating in the space. We saw a massive gap in the market and an opportunity to change the lives of millions of people who lack access to safe and reliable transportation. For many people in emerging markets, where public transport is slow, unreliable, and sometimes even dangerous, owning a vehicle is a necessity rather than a luxury. We are driven by our shared desire to fight transport inequality in a financially sustainable and socially impactful way. We believe that by fulfilling basic mobility needs, we can empower people to reach their full potential.

How long did it take to reach the prototype or MVP? What did you encounter?

It took about a year since the initial idea to buy our first car. Fundraising went surprisingly smoothly, but we had a lot of trouble convincing market participants that we indeed do want to buy second-hand cars for people who bank label “blacklisted” and refuse to provide vehicle financing for.

When exactly did you launch your product? Or when the launch is planned?

We bought a car for the first customer in February 2018. That first month we issued a grand total of 14 contracts. The pace has picked up considerably since then — by the end of 2022 we had bought more than 15,000 cars for people unfairly ignored by banks.

Tell us about the startup’s business model. How do you monetize your product?

Our business model revolves around providing car subscriptions to customers who don’t have access to traditional financing. We monetize our product by charging a monthly subscription fee that covers the cost of the vehicle rental, insurance, and GPS tracking. Because we own the cars that we rent out, the monthly payments made by customers go entirely to Planet42, allowing us to capture an attractive margin.

What are your target markets and consumers?

Our target markets are emerging economies where a significant portion of the population faces challenges in accessing traditional vehicle financing. Our primary focus has been on South Africa, but we have also launched in Mexico. We are also planning to expand to other markets in the future. Our target consumers are individuals who have been ignored or underserved by traditional banks when seeking vehicle financing, despite earning a stable income.

If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.

Since our launch, we have partnered with about 1,000 dealerships across South Africa and provided more than 15,000 people with access to cars. Approximately 90% of these customers would not have had access to a car without Planet42, as they don’t qualify for bank financing. We have raised a total of $150 million in debt and equity funding and aim to buy 1 million cars for our customers worldwide.

What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.

Our team consists of over 160 dedicated professionals, with most of our team members based in Johannesburg. We are always on the lookout for talented individuals who share our passion for fighting transport inequality and driving social impact.

Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.

Yes, we have raised a total of $150 million in combined equity and debt funding to date. Our investors include renowned names such as Naspers, Change Ventures, Startup Wise Guys, Martin Villig (Bolt), Ragnar Sass (Pipedrive), and Andrew Rolfe (ARS Holdings), as well as lenders like Rivonia Road Capital.

These investments have been crucial in supporting our mission to fight transport inequality as we expanded operations, established new partnerships with car dealerships, refined our technology, grew our team, and began to explore new markets and opportunities.

What’s next? Tell us about your future plans.

Our aim is to continue making a meaningful impact in the lives of people who are unfairly denied access to vehicle financing. We’re excited about our future plans, which include expanding our services to new markets. Furthermore, we’re committed to our goal of buying 1 million cars for our customers worldwide. To achieve this, we will continue to strengthen our partnerships with car dealerships, refine our scoring engine, and invest in new technologies that will improve our offerings.

Overall, our future plans revolve around scaling our business responsibly, expanding our reach to more communities, and staying true to our mission of fighting transport inequality and fostering social impact.