Apparently, Estonian investors may have well understood the African mobility market. The game now may be not to go after the public transport sector or to launch another ride-hailing startup. Arising from the $109 million investment secured by their fellow national company, Bolt (formerly Taxify) to invade the African market, another startup (this time fintech) Planet42 has just raised over $2.4 million to conquer the South African mobility market.
“Having a personal vehicle is a necessity in South Africa, as public transport is underdeveloped while ride-hailing is prohibitively expensive for most,” says Eerik Oja, co-founder and CEO. “A family car can be a lifesaver, but banks focus on newer, expensive vehicles and only approve 15% of car financing applicants. This leaves few alternatives to lower- and middle-income households.”
Here Is What You Need To Know
- This is Planet42’s seed round, consequently its first ever investment from external investors. Leading this round is Baltic-focused venture capital firm Change Ventures, which back founders based in Estonia, Latvia, Lithuania as well as Baltic diaspora entrepreneurs building their businesses elsewhere in the world. Also joining the VC firm in the investment are private backers and angel investors such as Martin Villig (Bolt), Ragnar Sass (Pipedrive), Marko Virkebau (MeetFrank), Kristjan Vilosius (Katana MRP), and several other Estonian tech entrepreneurs. That is, it looks like several Estonian investors are supporting one of their own.
- With this round of investment, Planet42 will keep expanding its portfolio of vehicles. The startup is targeting a total of 100,000 cars by 2024 in South Africa alone.
- As well as scaling there, the team is looking at international expansion across key emerging markets, where they will be offering motorcycles and other types of mobility, alongside cars.
Why The Investors Invested
Like had been previously stated, Planet42’s latest investment looks like several investors from Estonia are supporting one of their own. The co-founders have previously long been working in investment firms, hence the relative ease and deep connection in the industry. One of the co-founders, Marten Orgna also has a long history of the South African mobility space, hence the investors’ trust in the capacity of the team to execute.
“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,” Rait Ojasaar, Partner at Change Ventures said.
A Look At What Planet42 Does
Planet42 originally launched as CarGet in 2017 to service South Africa, a market well-known to co-founder and CFO Marten Orgna, who ran African Investments for Trigon Capital. The startup partners with dealerships across South Africa to offer access to cars for personal use to its largely underbanked clientele (9 out of 10 of customers).
Planet42 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, such as IDs, payslips and bank statements 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.
“We grew eight-fold in 2019 and we had our strongest month to date in April, despite the ongoing crisis. 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,” explains co-founder and CEO Oja, who gained experience in the alternative vehicle financing space as Country Manager for Mogo Finance in Estonia.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer