Why Change Ventures led investment in inclusive mobility FinTech Planet42
Following the recent public announcement of the Change Venture led €2.2M investment into Planet42, it is a good time to reflect on the genesis of our decision.
As is with every successful business, it’s best if your product is the answer to the client’s question. This means the truth resides in asking the right question. In a business setting, the right question takes the form of an acute problem your client is looking to solve. In South Africa, one of the central questions for nearly half of their 58 million population is how to gain access to mobility when banks don’t want your business. Especially when considering the country’s noninclusive public transport, plagued with several challenges. Now that we have identified the right question, what could be the right answer? You’ve guessed it right — Planet42!
Planet42 is offering inclusive mobility solutions to the underbanked in South Africa. In layman’s terms — they offer motor vehicles via an affordable rent-to-buy model to the population who banks refuse to deal with. But aren’t the “credit unworthy” themselves to blame, you may ask? The answer is both yes and no. South Africa has a colourful history of liberating and cranking down on consumers access to financial services. More than 24 million people are credit impaired or have no access to finance in South Africa. But everyone still needs a motor vehicle to get around. Now if that isn’t the sizeable population whose problem to solve, then what is?
This leads us to the quintessential question we must ask before any investment — why would Planet42 be THE answer to this painstaking question? It all comes down to our fund’s grassroots mission statement: to back the most ambitious Baltic founders globally.
Founded by the resourceful duo of Eerik Oja and Marten Orgna, the combined experience and skillset of the founders fits like a glove when it comes to solving mobility challenges in Africa. The CEO Eerik had previously worked as country manager of an alternative vehicle finance provider in Europe. Eerik proactively took on the challenge of introducing and implementing several lean business procedures to boost the operational and sales efficiency of his former employer. Although the said country unit became the best performing regional branch, Eerik felt that many of his ideas would require a much larger market to scale properly. So, when Marten reached out to Eerik with the idea of alternative vehicle finance in Africa, Eerik jumped at it. The two had been classmates in the Stockholm School of Economics in Riga and after graduation became colleagues at the global investment firm Trigon Capital. As Marten had previously been heading African investments for his former employer, he was intimately familiar with the continent’s challenges as well as opportunities. One of those opportunities was the underdeveloped mobility sector of the entire continent.
The duo hit it off immediately. They knew exactly what they wanted to do. Now, the question was where to do it. Inspired by the Blue Ocean Strategy, they sought to avoid overly competitive markets (i.e. The Red Oceans where sharks fight for the same prey) and opt for a less developed market with fever competitors. It didn’t take long for the duo to come to a realization that South Africa would be the perfect Blue Ocean to start with. Country of 58 million, English speaking, same time zone as folks back home. And so they set up their management company in Estonia and started their African expedition.
This all happened in 2017. Fast-forward to 2020, Planet42 has grown into one of the fastest growing challengers in South Africa’s mobility space and was looking to raise funding. This is where we started working with the founders to help them put together a funding round for further growth. In addition to the story above, we were equally fascinated by their work ethic and ambition. When asked, “how big of a vehicle portfolio do you plan to grow”, they answered without blinking — “one billion!”. A music to VC ears. There will surely be many challenges on the path of building a portfolio that’s worth a billion, including expanding into Latin America and South-East Asia as well as raising additional equity and debt capital to fuel the growth. But we are certain that this team has what it takes to pull it off big time.
