Car subscription startup raises $10-million in debt finance

Planet42, a South African founded startup that focuses on car subscription has secured $10-million in a debt financing round from Lendable Inc, a US-based institutional debt investor. 

 Planet24 raises $10-million in debt financing

The funding will be utilised to further the startup’s aims and objectives of democratising vehicle purchase and overall mobility for South Africans. In addition, it will be used towards the startup’s goal of purchasing 100 000 vehicles by 2024. 

A press statement issued by the startup provides insight into the role of debt financing for the business. 

“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.”

The startup plans to expand its operations into emerging markets and to raise a Series A round of funding in 2021. 

Eerik Oja, the CEO, and co-founder of Planet42 explains that the round of funding will be used to grow the startup. 

“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.

Democratising mobility

Founded in 2017, with headquarters in Nothern Europe, Estonia, Planet24 provides a service that allows its clients access to a personal vehicle via its car subscription service. 

The innovative startup has created an effective solution for locals who are deemed ‘blacklisted’ or who do not meet the requirements of purchasing a vehicle through the traditional method, via a bank. 

Utilising its patent technology, Planet24 purchases second-hand cars from a network of motor dealers and lists them as available purchases for its client base. This system cuts out the middle man, creating a virtual purchase experience without the need for in-person interaction. 

According to reports, since its inception, the startup has bought and delivered more than 2000 second-hand vehicles in South Africa. 

The technology

The startup has created unique technology based on a ‘proprietary scoring algorithm’ that automatically provides a detailed risk assessment of a potential customer. 

Viable customers are then prompted to choose a suitable car from any dealership that the startup has partnered with. 

The automotive startup purchases the customer’s chosen vehicle from the dealership and rents it to the customer on a subscription basis. 

In order to ensure that the security of their purchase asset is maintained, Planet24 placed tracking technology in the vehicle alongside comprehensive mechanical insurance. 

Read more: Kenya startup launches country’s first peer-to-peer private car sharing service
Read more: New car tech startup launches in Cape Town

Featured Image: (From left to right) Marten Orgna and Eerik Oja, founders of Planet24 (Supplied)

Ishani Chetty: Editor
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