Home / Gadgets / Grover raises $71M to grow its consumer electronics subscription business

Grover raises $71M to grow its consumer electronics subscription business


Grover raises $71M to grow its consumer electronics subscription business – TechCrunch

A startup tapping into the concept of the circular economy, where people don’t buy items outright but pay an incremental amount to use them temporarily, has raised some funding to scale its business in Europe and beyond. Grover, a Berlin-based startup that runs a subscription model where people can for set fees rent out consumer electronics like computers, smart phones, games consoles and scooters, has picked up €60 million ($71 million).

The funding is coming in the form of €45 million in equity and €15 million in venture debt.

The company, which as of September last year had 100,000 subscriptions and now has around 150,000, said it aims to triple subscriptions to 450,000 by the end of 2021. It will be using the funds to expand to more markets — both to grow its business in Germany, Austria and the Netherlands (where it’s already operating) and to launch in Spain and the U.S. — and to add more product categories into the mix, including health and fitness devices, consumer robots and smart appliances.

And, it plans to invest in more innovation around its rental services. These have seen a new wave of interest in particular in the past year of pandemic life, which has put a strain on many people’s finances; definitely made it harder to plan for anything, including what gadgets you might need one week or the next; and turned the focus for many people on consuming less, and getting more mileage out of what they and others already have.

“Now more than ever, consumers value convenience, flexibility and sustainability when they shop for and use products. This is especially true when it comes to technology and all of the possibilities that it has to offer — whether that’s productivity, fun, or staying in touch with our loved ones,” said Michael Cassau, CEO and founder of Grover, in a statement. “The fresh funding allows us to bring these possibilities to even more people across the world. It enables us to double down on creating 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 people, but also Grover’s vast growth potential. We’re still just scratching the surface of a €1 trillion global market.”

JMS Capital-Everglen led the Series B equity round, with participation also from Viola Fintech, Assurant Growth, existing investors coparion, Augmentum Fintech, Circularity Capital, Seedcamp and Samsung Next, and unnamed founders and angel investors from Europe and North America, among others. Kreos Capital issued the debt.

Samsung is a strategic investor: Together with Grover it launched a subscription service in December that currently covers select models from its S21 series, among other devices, such as the Tab S7, Galaxy A models, and with plans to introduce wearables, smart home devices, TVs, notebooks and more into the Grover fold. “Samsung powered by Grover,” as it’s called, started in Germany, so one plan may be to use some of this investment to roll that out to other markets.

The funding is coming on the heels of a year when Berlin-based Grover said its business grew 2.5x (that is, 150%). Its most recent annual report noted that it had 100,000 active users as of September of last year, renting out 18,000 smartphones, 6,000 pairs of AirPods and more than 1,300 electric scooters in that period. It also said that in the most recent fiscal year, it posted net revenues of about $43 million, with $71 million in annual recurring revenue, and tipping into profitability on an EBITDA basis.

It raised €250 million ($297 million) in debt just before the start of the pandemic, and previously to that also raised a Series A of $44 million in 2018, and $48 million in 2019 in a combination of equity and debt in a pre-Series B. It’s not disclosing its valuation.

The company’s service falls into a wider category of startups building services around the subscription economy model, which has touched asset-intensive categories like cars, but also much lighter, internet-only consumables like music and video streaming.

Indeed, Grover has been regularly referred to as the “Netflix for gadgets,” in part a reference to the latter company’s history starting out by sending out physical DVDs to people’s homes (which they returned when finished to get other films, under a subscription model).

Similar to cars and films, there is definitely an argument to be made for owning gadgets on a subscription. The pricier that items become — and the more of them there are battling for a share of consumers’ wallets against many of the other things that they can spend money to own or use — the less likely it is that people will be completely happy to fork out money or build in financing to own them, not least because the value of a gadget typically depreciates the minute a consumer does make the purchase.

At the same time, more consumers are subscribing, and often paying electronically, to services that they use regularly: Whether it’s a Prime subscription, or Spotify, the idea with Grover — and others that are building subscriptions around physical assets — is to adopt the friction-light model of subscribing to a service and apply it to physical goods.

And for retailers, it’s another alternative to offer customers — alongside buying outright, using credit or offering by-now-pay-later or other kinds of financing in order to close a deal. Shopping cart abandonment, and competition for shoppers online, are very real prospects, so anything to catch incremental wins is a win. And if they are working in a premium (cost-per-month of use, say) to give customers possession of the gadget in question, if they manage to secure enough business this way, it actually might prove to be even more lucrative than outright sales, especially if the maintenance of those goods is offloaded to a third party like Grover.

Although some people have regularly been wary of the idea of used consumer electronics, or other used goods, that has been shifting. There have been a number of companies seeing strong growth in the last year on the back of helping consumers resell their own items. This has been helped in part by buyers being more focused on spending less (and sellers maybe earning back some money in the process), but also being keen to reduce their own footprints in the world by using items that are already out in circulation. In Europe alone, last week, Brighton-based MPB raised nearly $70 million for its used-camera equipment marketplace. Other recent deals have included used-goods marketplace Wallapop in Spain raising $191 million and clothing-focused Vestiaire Collective raising $216 million.

What is interesting here is — whether it’s a sign of the times, or because Grover might have cracked the subscription model for gadgets — the company seems to be progressing in an area that has definitely seen some fits and bumps over the years.

Lumoid out of the U.S. also focused on renting out tech gear, but, despite finding some traction and inking a deal with big box retailer Best Buy, it failed to raise the funding it needed to run its service and eventually shut down. It’s also not alone in trying to tackle the market. Others in the same space include Tryatec and Wonder, which seems to be focused more on trying out technology from startups.

The big question indeed is not just whether Grover will find more of a market for its rental/subscription model, but also whether it has cracked those economics around all of the supply chain management, shipping and receiving goods, reconditioning or repairing when needed, and simply keeping strong customer service throughout all of that. As we’ve seen many times, a good idea on one level can prove extremely challenging to execute on another.

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2021″,”slug”:”tc-sessions-saas-2021″,”taxonomy”:”tc_event”,”rapidData”:”pt”:””,”pct”:””,”_links”:”self”:[“href”:”https://techcrunch.com/wp-json/wp/v2/tc_event/576831817″],”collection”:[“href”:”https://techcrunch.com/wp-json/wp/v2/tc_event”],”about”:[“href”:”https://techcrunch.com/wp-json/wp/v2/taxonomies/tc_event”],”up”:[“embeddable”:true,”href”:”https://techcrunch.com/wp-json/wp/v2/tc_event/449559507″],”wp:post_type”:[“href”:”https://techcrunch.com/wp-json/wp/v2/posts?tc_event=576831817″,”href”:”https://techcrunch.com/wp-json/wp/v2/tc_events?tc_event=576831817″,”href”:”https://techcrunch.com/wp-json/wp/v2/tc_video?tc_event=576831817″],”curies”:[“name”:”wp”,”href”:”https://api.w.org/rel”,”templated”:true]]]}},{“id”:2142255,”date”:”2021-04-22T08:09:44″,”date_gmt”:”2021-04-22T15:09:44″,”guid”:”rendered”:”https://techcrunch.com/?p=2142255″,”modified”:”2021-04-22T10:20:56″,”modified_gmt”:”2021-04-22T17:20:56″,”slug”:”how-are-vcs-handling-diligence-in-a-world-where-deals-open-and-close-in-days-not-months”,”status”:”publish”,”type”:”post”,”link”:”https://techcrunch.com/2021/04/22/how-are-vcs-handling-diligence-in-a-world-where-deals-open-and-close-in-days-not-months/”,”title”:”rendered”:”How are VCs handling diligence in a world where deals open and close in days, not months?”,”content”:{“rendered”:”

The global venture capital market had a cracking start to the year. Coming off a 2020 high, VC totals in the United States, in Europe, and among competitive verticals like insurtech and AIu00a0are on pace to set new records in 2021.n

The rapid-fire deal-making and trend of larger venture checks at higher valuations that The Exchange has tracked for some time require private-market investors to make decisions faster than ever. For venture capitalists, the timeline for reaching conviction around a startupu2019s thesis and executing due diligence has become compressed.n

Some venture capitalists are turning to data to move more quickly. Some are spending more time preparing to be vetted themselves. And some investors are simply doing the work beforehand.n


n

The Exchange explores startups, markets and money. n

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.n


n

We were tipped off to the concept of pre-diligence during the reporting process for a look into recent fundraising trends in the AI/ML space. Sapphire investor Jai Das, when asked about how he was handling a competitive and swiftly moving market for AI startup investments, said that “most firms are completing their due diligence way before the financing actually happens.”n

""How does that work in practice? Per Das, startups that raise quick Series A and B rounds are “tracked by [early-stage] investors as soon as they raise their seed financings. So there is no need to do any due diligence during the financing and hence most of these financings are pre-emptive.”n

Venture capital: Now more about sales than ever before!n

This morning, The Exchange is digging into the question of how VCs are handling diligence in a world where the most attractive deals can open and close faster than ever, and old models of deep diligence and paced deal-making are outmoded.n

Getting to yesn

One way that investors are betting on themselves in a bid to speed their diligence and decision-making is by investing in their own tech. That may sound obvious, given that venture capital dollars often land in the accounts of tech-focused companies, but in a business that was previously known for its relationship focus — more on that shortly — the trend is worth considering.



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