In a move that bolsters its investments in mobility and transport technology, Naspers’s SA-focused venture arm has put down R54m to back a local technology platform that helps people without bank accounts, or access to credit, to buy and rent vehicles for everyday use.
Its Foundry unit had led a $5.8m (R91m) funding round for Planet42, an artificial intelligence (AI)-based car subscription platform, investing $3.4m, Naspers said on Tuesday.
Naspers Foundry is the group’s SA-focused R1.4bn early-stage tech investment fund.
Founded in 2017, Planet42 says it aims to address transport inequality by offering an inclusive car subscription service to customers who typically cannot access traditional bank credit. In emerging markets, including SA, vehicle finance — and therefore vehicle ownership — is out of reach for most low and middle-income earners.
Planet42 is competing in a growing market that has seen the emergence of other local start-ups such as FlexClub, which itself managed to raise $5m in March.
In essence, these companies use a subscription model to give people access to vehicles. This could be seen as a form of long-term rental as lease periods typically go beyond the short one-day or one-week periods rental companies Avis and Hertz specialise in. Amounts paid for such arrangements also tend to be cheaper than the cost of financing a vehicle.
Planet42 has developed credit scoring algorithms which it uses to bridge the lending gap, using a wider range of data sources than traditional credit scores to assess risk. These algorithms determine a “suitable budget” for each customer and, based on this, subscribers can choose any new or pre-owned car, the company says.
Through a network of more than 700 local car dealerships, Planet42 buys the car and rents it out to the customer on a subscription basis, with customers being able to either buy or return the car at any time. Since its founding, the company has bought more than 7,000 vehicles using this model.
“Planet42’s car subscription model is unique because we focus on the underbanked customer and the second-hand car,” Eerik Oja, CEO and co-founder of Planet42, said after the funding announcement.
“This has allowed us to outperform peers who operate in markets such as Europe and the US, where car subscription is a solution to a problem that doesn’t really exist — most people can get a bank to buy a car for them.”
The capital raise included investments from existing investors Change Ventures and Startup Wise Guys.
Planet42 says the funds raised in this round will be used to expand its car inventory in both SA and Mexico, where it also has operations, putting the company on track to achieve its ambitious goal of “providing 1-million cars to people facing transport inequality by 2025”.
Fabian Whate, head of Naspers Foundry, said the group was delighted to be the first South African investor “supporting Planet42 with its next phase of growth”.
He said the start-up’s solution to address transport inequality has “the potential to unlock further economic participation” in SA and other parts of the world.
“This fits in with our focus of backing purpose-driven technology businesses. Investing in Planet42 is consistent with the portfolio we’ve built to date and Naspers Foundry’s healthy pipeline of potential future investments,” he said.
This investment in Planet42 marks Foundry's eighth since its inception.
In 2019, Naspers backed Aisha Pandor’s online home cleaning services business SweepSouth with R30m. In August, the unit made its largest investment, with R120m being put into insurer tech business Naked Insurance.
As a group, Naspers has focused mainly on food delivery, fintech and classified, but is now investing more in education as a new area of growth, driven by increased online learning due to Covid-19.
Its international unit Prosus — which has large investments in companies such as China’s Tencent, Brazil’s iFood and Germany’s Delivery Hero — entered the edtech market in 2016. The group’s main edtech units include Brainly, Codecademy, Eruditus, SoloLearn and Udemy.
Regarding transport, Naspers has previously invested through Prosus Ventures in European micromobility company Dott in 2018 with a follow-on investment this year, and in Pakistan-based logistics company Bykea in 2020.
Earlier this year, Foundry invested R42m into a Cape Town-founded start-up specialising in creating digital maps of informal transport routes called WhereIsMyTransport.
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