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.