Gadgets

Grover raises $ 71 million to expand its consumer electronics subscription business

grover-raises-71-million-to-expand-its-consumer-electronics-subscription-business

A startup involved in the concept of circular economy where people don’t buy items outright but pay an additional amount to use them temporarily has raised some funds to scale their business in Europe and beyond. Grover, a Berlin-based startup that operates a subscription model that lets people rent out consumer electronics such as computers, smartphones, game consoles, and scooters for set fees, has raised 60 million euros ($ 71 million).

The financing takes the form of equity of EUR 45 million and risk capital of EUR 15 million.

The company, which had 100,000 subscriptions last September and now has around 150,000, intends to triple subscriptions to 450,000 by the end of 2021. It will use the funds to expand into more markets – both to expand its business in Germany, Austria and the Netherlands (where it already operates) and to start in Spain and the US – and to add more product categories to the mix, including Health and fitness equipment, consumer robots, and smart devices.

And it’s planned Invest in more rental innovation. In the past year of the pandemic, in particular, they experienced a new wave of interest that put a strain on the finances of many people. It was definitely harder to plan for anything, including what equipment you might need some week or the next. and for many people focused on consuming less and getting more kilometers out of what they and others already have.

“More than ever, consumers value convenience, flexibility and sustainability when buying and using products. This is especially true of technology and all of the possibilities it offers – be it productivity, fun or being in touch with loved ones, “said Michael Cassau, CEO and founder of Grover, in a statement. “The new funding enables us to make these opportunities available to even more people around the world. This enables us to create an unparalleled customer experience for our subscribers and to push the boundaries of the most innovative ways for people and businesses to access and enjoy technology. The strong support from our investors confirms not only the important value our service brings to the people, but also the enormous growth potential of Grover. We’re still scratching the surface of a $ 1 trillion global market. “

JMS Capital-Everglen led the Series B share round, in which Viola Fintech, Assurant Growth, existing investors, Augmentum Fintech, Circularity Capital, Seedcamp and Samsung Next as well as unnamed founders and angel investors from Europe and North America participated . Kreos Capital has issued the debt.

Samsung is a strategic investor: together with Grover, the company launched a subscription service in December that currently includes selected models from the S21 series, including devices such as the Tab S7, the Galaxy A model and the introduction of wearables and smart homes -Devices, televisions, notebooks and more in the Grover fold. “Samsung powered by Grover”, as it is called, was launched in Germany. One plan could therefore be to use part of this investment to expand it to other markets.

The funding follows a year in which Berlin-based Grover grew 2.5 times (ie 150%). Its most recent annual report found that there were 100,000 active users as of September last year who rented 18,000 smartphones, 6,000 pairs of AirPods and more than 1,300 electric scooters during that period. Last fiscal year, net sales were approximately $ 43 million, with annual recurring revenue of $ 71 million, and increased profitability on an EBITDA basis.

Shortly before the pandemic began, debts of EUR 250 million ($ 297 million) were taken out. Previously, it raised a Series A of $ 44 million in 2018 and a $ 48 million combination of equity and debt in 2019. Serie B. It does not disclose its rating.

The company’s service falls into a broader category of startups building services around the subscription economy model that has touched wealthy categories like automobiles but also much lighter internet-only consumables like music and streaming video.

In fact, Grover has been regularly referred to as “Netflix for Gadgets,” in part as a reference to the latter company’s history by first mailing physical DVDs to people’s households (which they brought back to receive other movies after taking out a subscription model) ).

Similar to cars and movies, there is definitely an argument for owning gadgets for a subscription. The more expensive the items get – and the more of them struggling for part of consumers’ wallets against many other things that they can spend money to own or use – the less likely it is that people will be completely happy to share the money spend or build in funds to own them, not least because the value of a gadget usually declines the moment a consumer makes the purchase.

At the same time, more and more consumers are subscribing to services they regularly use, and often paying electronically: whether it’s a Prime subscription or Spotify, the idea with Grover – and others who subscribe to physical assets – is this to adopt the services friction light model for subscribing to a service and applying it to physical goods.

And for retailers, offering customers another alternative – besides buying directly, using credit, or offering “Now-Pay-Later” or other types of financing to close a deal, is another alternative. Cart abandonment and competition for online shoppers are very real prospects. So anything you can make incremental profits is profit. And if they work with a premium (e.g. cost per month) to enable customers to own the gadget in question, and if they manage to secure enough business in this way, this could actually prove to be even more lucrative than Directly turn out sales, especially when the maintenance of these goods is outsourced to a third party like Grover.

Although some people have regularly been wary of the idea of ​​used consumer electronics or other used goods, this has changed. There have been a number of companies that have seen strong growth over the past year from helping consumers resell their own items. This has been helped in part by the fact that buyers are more focused on spending less (and sellers may get some money back in the process), but also by an interest in reducing their own footprints in the world by using items that are already in circulation are. In Europe alone, Brighton-based MPB raised nearly $ 70 million last week for its used camera equipment market. Recent deals included Wallapop second hand market in Spain, which raised $ 191 million, and clothing-focused Vestiaire Collective, which raised $ 216 million.

What’s interesting here – whether it’s a sign of the times, or because Grover cracked the subscription model for gadgets – the company appears to be making headway in an area that has definitely had some seizures and bumps over the years.

US Lumoid also focused on tech equipment rental, but despite some traction and a deal with big box retailer Best Buy, failed to raise the funds needed to run its service and eventually closed. Nor is it alone when it comes to tackling the market. Others in the same space include Tryatec and Wonder, who seem to be more focused on trying out technology from startups.

Indeed, the big question is not only whether Grover will find more market for its rental / subscription model, but also whether it will provide this economics in terms of overall supply chain management, shipping and receiving goods, overhaul or repair Need has cracked and simply to maintain strong customer service throughout all of that. As we’ve seen many times before, executing a good idea on one level on another can be extremely difficult.

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Melinda Martin