South Africa-based but Estonian-founded fintech start-up Planet42 has raised 2.2 million euros of investment in order to continue facilitating access to mobility for the under-banked population in the African country.
The seed round was led by Change Ventures, with private backers including Martin Villig of Bolt, Ragnar Sass of Pipedrive, and a number of other Estonian tech entrepreneur, once again proving just how important Estonia’s existing tech firms are for start-ups.
Founded as CarGet in 2017 by a duo of Estonians, Marten Orgna and Eerik Oja, the company offers car loans to its under-banked clientele on a rent-to-buy basis.
According to Eerik Oja, co-founder and CEO, the company provides an essential service in a country where owning a personal vehicle is a must.
“Having a personal vehicle is a necessity in South Africa, as public transport is underdeveloped while ride-hailing is prohibitively expensive for most,” he says.
But many people cannot get loans to buy a new car, and that’s where Planet42 steps in.
“A family car can be a lifesaver, but banks focus on newer, expensive vehicles and only approve 15 per cent of car financing applications. This leaves few alternatives to lower- and middle-income households,” Mr Oja adds.
The company has partnered with dealerships across the country, focusing on pre-owned cars which gives their users a more affordable selection of vehicles to choose from.
The system is simple, with potential new customers filling out an application at a participating dealer. After that, the company’s special algorithm takes over and the application is settled within a minute. The algorithm takes into account credit bureau, affordability, and other data.
If potential clients are approved, the company buys the car from the dealership and the customer makes a monthly payment with the option of buying the car. After 60 months, the car can be purchased for 5,000 South African rand (around 260 euros).
Cars are secured with tracking technology, as well as a comprehensive insurance.
To date, the company has delivered 2,000 cars to customers this way, and its innovative approach has led to strong growth.
“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,” Mr Oja says.
And there’s a long way to go still, as more than 24 million people in South Africa are credit-impaired or have no access to credit at all.
“That’s well over half of the adult population,” explains Mr Oja, who gained experience in alternative financing as country manager for Estonia at the Latvian-based Mogo Finance.
The 2.2 million euros that the company snatched up this seed round will be used to expand its portfolio of vehicles. Planet42 is targeting 100,000 cars in South Africa by 2024. And expansion into other key emerging markets is also being eyed.
“We want to help people across the world commute with ease, earn more and feel secure. No one deserves to be deprived of the opportunities something as basic as a personal vehicle brings,” Mr Oja concludes.
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