A growing number of people are looking for ways to live more sustainably amid growing concerns about the environment and what we humans continue to do to pollute it. Today, a startup called Grover who built a business around one aspect of that – getting people to buy and eventually throw away less consumer electronics like phones, monitors and electric scooters by offering them attractive subscriptions to use up their stock of new gadgets or used instead – announces a big round of financing to expand its business.
The Berlin-based company has raised $330 million – specifically $110 million in equity and $220 million in debt – money it plans to use both to expand its device stock as it prepares for increased user growth; but also to develop more financial tools and services to personalize the experience for individuals and to encourage more businesses on its platform through programs such as loyalty programs.
Energy Impact Partners leads the Series C equity portion, along with Co-Investor Partners, Korelya Capital, LG, Mirae Asset Group; and previous backers Viola Fintech, Assurant and coparion are also participating. Fasanara Capital provides the debt. The mix of debt and equity is typical for a company that is, in effect, building a leasing business: It’s the same approach Grover took when she raised $71 million for her Series B il a year ago.
The round values Grover at more than $1 billion, the company confirmed.
Grover has seen a steady pace of growth over the past few years – CEO and Founder Michael Cassau said that across its footprint in Germany, Austria, the Netherlands, Spain and the United States, Grover has doubled subscriptions and activities over the past year, and it currently has half a million items in its catalog available for subscription, 2 million registered users and 250,000 active customers (some subscribe to use more than one gadget). This growth is driven by several competing market trends.
The first of these is the push for more sustainability and a new appreciation for the so-called “circular economy” approach – spurred not only by greater awareness of environmental issues, but also by a shift towards mutual support. around Covid-19, where many people were communicating (sometimes for the first time) with their loved ones, sharing resources to get through the difficulties of the pandemic. Sometimes these resources were used goods passed on or sold at low prices to others: this opened the door to a different way of thinking for many people.
This collective change was also driven by a second trend, namely a tightening global economy, which forced consumers to consider spending less on certain discretionary items.
“We see ourselves as making it easy to get into part of your budget,” Cassau told TechCrunch in an interview.
And the idea of spreading an expense over something that can be used but is still in good condition seems to be more appealing now than it would have been in the past.
“We’re seeing very strong demand, even for second- and third-year products,” Cassau said. “Some people want the latest items, and this especially applies to new phones, but a lot of people are happy with an iPhone 11 or even an iPhone 10. You see it in the secondary market as well,” a- he added. like Back Market (which itself raised a big round on a huge valuation earlier this year) where people can pick up refurbished devices. And it’s a move playing out in other categories too, with Vinted (outside Lithuania) now valued at $4.5 billion for its second-hand clothing market. “It’s a huge undertaking, even exceeding the primary in some markets.” Cassau said he sees Back Market as a key competitor in his field.
On average, a product sees at least four owners over “several years”, but some items are outliers, with a GoPro camera in its stock, he said, distributed 27 times.
Grover got his start with – and still counts – consumers as his main clients, but he also sees a growing interest in the field of B2Bwhere some consumers are now also taking out subscriptions for items to use in their work lives, and businesses are also starting to engage with Grover to purchase multiple devices to outfit their teams, offices, temporary staff, and generally as part of a greater effort to reduce their overhead and fixed costs.
The startup has also developed a range of what Cassau described to me as “integrated finance” products — financial services it offers alongside its subscription business, which Grover didn’t build from scratch. but customized using fintech APIs built by others.
In its case, it offers users Map of Grovebuilt with Solaris Bank, which people can use as a payment card in the word, which gives users 3% “cash back”, earning money for their monthly subscriptions every time they spend money on the map.
Cassau said adoption of the card had a strong correlation with people taking up more subscriptions to the company, often ranging from one to three items. Powered Grover users could spend up to $60 a month on their subscriptions, he added.
Grover now has a one-year purchase option, where users can buy an item they subscribe to for $1 after that date, and about 10% of his customers opt for that, he said. said, but most rent, return and exchange for their following items. You can also rent in increments of 1 to 18 months.
Funding comes at an interesting time in the venture capital world: we and others have heard anecdotally that funding, especially later-stage deals and larger deals, has largely dried up lately. months, partly because of the slower pace of public listings and other exits and a general caution is spreading about this and other issues like the conflict in Europe, with the war in Ukraine and Russian actions that weigh on us all.
Against that backdrop, Cassau said Grover hadn’t encountered any difficulties in his own fundraising efforts, although he could certainly see the “change in the markets starting in January.”
He continued: “I don’t think we’ve been a boom and bust business,” he said. “We are naturally moving towards this valuation, so we have seen less of an effect from this backlash than others might have seen.”
Indeed, it is hoped that areas such as attention to sustainability and services that help ordinary consumers to live in a way that respects this concept with less and less friction are not “trends”, but changes that are here to stay.
“Grover has successfully pioneered the subscription economy for consumer electronics, a critically important decision as we build a net zero world,” said Nazo Moosa, managing partner at Energy Impact Partners, in a press release. “The intersection of society’s linear consumption patterns and climate change is an important area of interest for EIP’s second fund, which closed at $1 billion last year. We believe Grover will reinvent the company’s relationship with consumer technology and therefore allow us to continue using the products we need while minimizing harm to our planet. Our investment in Grover is part of a mission to help scale start-ups around the world that have the ability to advance the transition to a more sustainable future, and we look forward to working closely collaboration with Grover as they enter this exciting next stage. phase.”