Planet42
🚗

Planet42

General overview

Planet42 - Socially inclusive car subscription. Fighting transport inequality by putting cars in the hands of people unfairly ignored by banks.

Problem

Too many people are not accepted by banks for loan applications, leaving them disadvantaged. Moreover, a significant number of those people are viable to receive and pay the loan, but the scoring model of banks is too harsh. Planet42 is trying to fix the inequality and put cars in the hands of those who the banks are unfairly ignoring.

image
image

Solution

Planet42 is providing rent-to-buy car subscription to South African (also first steps in Mexico done, and Brazil coming up) individuals. They give people the opportunity to drive and own any vehicle regardless of age.

image
  • The user can apply for a car subscription either online or at one of the nearly 1000 car dealerships that Planet42 has added to their network to generate leads and supply of second hand cars.
  • Every car is covered by comprehensive insurance (kasko) through a fleet policy sourced by Planet42.
  • Planet42 buys the car from the dealership, becoming the owner of the given car.
  • The car dealer signs all the needed agreements on behalf of Planet42 before giving out the car to the user.
  • Every car is covered with a mechanical insurance policy (motor warranty) when delivered to the customer.
  • A third party installs a GPS tracker on every car.
  • The user selects a car costing up to 12k€ (current state)
  • If the application is successful, the user receives a car from a dealership, which can also be bought at any moment for the remaining amount, OR user can return a car if there is no wish to buy it out.
‼️
Please note that a marketplace model in given countries seems unlikely as there is very little supply (willingness to finance cars) to match the overwhelming demand. In case Planet42 will not manage supply (i.e. raise sufficient debt financing), it will be difficult to address all the clients.

Addressable Global Market:

image
image
‼️
Please note that the markets Planet42 is tapping into are underserved by legacy finance companies like banks who focus on the elite, leaving huge unmet demand from the emerging middle class who despite stable incomes cannot get access to traditional vehicle finance.

Marketing

Marketing done through two main channels - dealerships and web applications. The split is about about 50/50 (monthly 25k apps from dealers and 25k apps from the website):

  1. Dealer
    1. Dealers log into the dealer module https://dealer.planet42.com/ and submit applications on behalf of the customers. The dealers currently do not get commission for Planet42 applications, although the company expects this to change once viable competitors emerge.
  2. Web apps
    1. The other channel is the website https://planet42.com/za/, where about a fifth of the traffic is organic and the rest paid (Google and Facebook Ads).

CAC: € 91

LTV: € 8,7k (31 month)

CAC payback period: <1 month

‼️
Please note, currently Planet42 is restricting marketing spend as there is not sufficient funds available to meet the overwhelming demand. It is trivial to increase application volume once new funding has been secured.

Unit economy + Business

Price:

image

Sales Cycle:

MRR: EUR 2.4m
  • January 2022 - 1,680,622 €
  • February 2022 - 1,794,836€
  • March 2022 - 2,089,563€
  • April 2022 - 2,454,034€
  • May 2022 - 2,742,906€
  • June 2022 - 2,896,603€
  • July 202 - 3,090,405€

Burn rate - cash positive MoM

Runway:

image

Product

The product is segmented in three main stages

image
Apply:

The user needs to submit the application and see if Planet42 scoring model will give a green light. What is to the core principle of the scoring model:

  • Stable income of a user is the key
    • Planet42 is working with collaboration with a legal partner, asking the user to present all the needed documents related to the bank activity.
    • Legal partner, who goes through document sets (.pdf), and identifies if the user is matching what he applied with VC what statements are actually showing.
    • For boarder-line cases, Planet42 may ask user to get access to the bank for detailed analyses. This mostly applies to “bad customers”, the ones who most likely will not get accepted but still stand a chance in case access to bank will be given and analyses performed. (so far, 40k bad customers who are asked to do so)
  • Willingness to pay” is the biggest filter/indicator
    • Since there are some cases where the user actually has the money but is not willing to pay, “willingness to pay” is a colossal filter (decision made based on existing data analyses).
    • GPS tracker also helps to analyze whether this is risky or not based on the behavior data.
  • Behavioural data is being monitored and processed more and more
    • GPS trackers allow Planet42 to implement behavioral data. A good example is “where is the user from 9-5 pm?, is the car at the same place as yesterday, at his presumed work?”. Analyses of similar patterns allow Planet 42 to predict and potentially avoid risks.
Drive:

After first stage of “Apply” is passed, user moves to “Drive” phase, where:

  • User receives a chosen car from a partner-dealership, which is now being rented to the user with a monthly subscription fee.
  • All the costs, such as insurance, motor warranty, GPS tracker are being covered by monthly instalments users pays.
Buy:

User always has an option to “buy out car now” with the price that is getting lower every month.

  • User has an option not to buy the car out and continue to use it on the subscription.
    • User also has an option to return the car 6 month after receiving the car for the use.
image
‼️
Please note, as weird as it may sound, Planet42 is currently making the user flow more complex to increase conversion. Introducing more friction to the onboarding flow results in better conversion as customers are used to cumbersome processes. A frictionless experience raises fraud suspicions - customers can’t believe it can be this easy to get a car!

Customers:

Good customer - fully up to dates on payments (9 month)

Bad customer - default is bad

Currently:

  • Planet42 is working a lot with local dealers to eliminate the trust issue. People would like to buy car from the places they can come back physically.
  • Mexico was also launched and operating by now. The go-to market within Mexico was to enter through Kavak - an online platform that offers insight into buying and selling used cars. This move added layer of trust while launching.
  • Planet 42 bought over 100 cars until today in Mexico via Kavak, but is now looking to switching to dealership model as in SA as Kavak is slow and orientated on more premium cars.

In Development + Future:

  • 10k more cars will be added with debt facility (agreed in principle), which will be dispatched within a year time from purchase.
  • ML for application scoring is the next step as for the most users connecting bank account is not needed.
  • Planet42 is now working on opening up their own car dealership, eliminating the dealers from the chain. This will become the biggest car dealership in Africa.

Operations from here on

  • Working on automations
  • Growing the car park as it is core to meeting demand
  • Approval team was eliminated and jobs automated
  • Validation team is next for automation (in progress)
  • Some parts, like handling insurance claims still will need real people to tackle.
Growing in Mexico, and a launching in Brazil in 2023
image
image

Also:

After the car has been in use it goes to “liquidation”, which means selling the car on auction, enabling to generate some back some of its initial costs. Writing off part form 39% of the whole. Planet42 is also testing alternatives.

  • repair and refurbish the car and put it to secondary use
  • offer the partner-dealerships to sell the car for rev share

Validations

Launched in: 2017

Key Metrics: ARPU / LTV / CAC / Contracts issued / Cars purchased

Paying customers: 7000+

As things stand, Planet 42 is approving 38% of the received applications. Not possible to scale without adding more cars to the car park.

image

Investments so far

Amount: 78m€ (10m€ equity / 68m€ debt)

Investors so far: Naspers / Change VC / Lemonade Stand / founders of Bolt and Pipedrive for equity + Lendable / Mintos for debt

Cap Table: Founders 49% / Investors 46% / Options 5%

Debt: 68m€ all together. New debt is being taken on as company is asset heavy and needs new cars to scale and grow.

Loans in more detail:
  • Lendable gave loan of 10m€ in 2021 and 20m€ in 2022
  • About to sign a $75 million debt facility with US credit fund, expected in September
  • Senior secured loans (cars are serving as the collateral)
  • Unsecured loans with about 15-16% interest at the moment on average
  • Planet42 portfolio yield is about 50-60% - ample margin to service loans
  • More detailed Cap table can be seen upon request
‼️
Please note, Equity money is for product + scaling, and loans for operations (mainly buying cars)

Team

image

Eerik Oja (CEO) / Marten Orgna (CFO) / Alex James (CRO) / Rasmus Erlemann (Head of Data science) / Grant Wing (COO) / Julie Kearns (Head of people) / Liisa Suvorova (Head of Growth) / Margit Munski (Sr. Poduct) / Robin Eriemann (Product)

image

Competitors

Existing direct competitors like WeRentCars are copycats who have not been able to scale operationally nor attract significant funding. In addition, Planet42’s offering has some overlap with traditional rental companies, legacy commercial banks, unsecured lending, and dealership self-finance. Compared to these competitors Planet42 has superior risk scoring tools as well as offering a more accessible (low deposit) and flexible (any car can be bought for car subscription, the vehicle can be returned or bought out, etc.) product to customers.

Round information

General Ask: 16m€

Commitments so far, amount: lead investors Naspers and Andrew Rolfe have committed a total of EUR 10.5m, in addition EUR 5m in SAFEs has been signed mainly from existing shareholders.

Investment instrument: SAFE with post money valuation cap 125m€ (draft added at the end of the memo) / 0% discount on round valuation / Have signed term sheet at EUR 82m pre-money that we expect to close by the end of October, round size will me max EUR 20m, more likely around EUR 17m (so below valuation cap)

Pre-money valuation: 82m pre-money

Round closing deadline: 19.09.2022

image
‼️
Planet42 is about to sign the largest debt of 75m$ form the US to buy cars in SA as currently the demand is way higher than supply.

Ask for Fund Fellow Founders

Fund Fellow Founders allocation: 300 000 €

SPV Lead: Akim Arhipov / 10 000€

Min ticket to participate: 10 000€

Funds allocation:

  • New Markets - Mexico + Brazil
  • Expand the team
  • Automate product

Pitch Deck:

Planet42 equity deck 2022-08.pdf2073.8KB

Upon Request available: Detailed Cap Table / Costs and Revenue + forecast / PnL / Debt allocation graph / Agreements (Loan Agreements, templates, contracts)

SAFE draft:

SAFE investor name Planet42 XXJun22.docx.pdf180.4KB