German startup Grover plans to bring its monthly subscription plans to allow people to rent smartphones, laptops, and other gadgets to the United States after raising $53 million from investors.
The Grover’s Rent The Runway-style service already has 165,000 customers in Germany, Austria and the Netherlands who rent directly, or bought a gadget on a subscription from one of its retail partners.
The Berlin-based startup raised $53 million (€45 million) from new and existing investors including JMS Capital-Everglen, Viola Fintech and Assurant and $17 million (€15 million) in venture debt.
“The whole idea of hardware as a service model detaches the payment from the asset—you don’t put people into debt but give them the flexibility to return a product they no longer find useful,” said Michael Cassau, founder and CEO of Grover.
Cassau said the Series B round would fund Grover’s expansion into the U.S. and Spain, its growth in its existing markets, and to develop its own financial services product. That could be a loan at a lower interest rate for Grover customers with a proven ability to repay, or a form of cashback for loyal customers holding subscriptions on several gadgets, said Cassau.
The circular economy, or the idea of renting a luxury item, has swept the fashion industry with Rent The Runaway leading the pack followed by a string of peer-to-peer rental marketplaces. Grover could face headwinds bringing this model to consumer gadgets. The startup is not only competing against tech giants like Apple who offer its own instalment plans, traditional credit cards and loans but also the “buy now, pay later” fintechs like Sweden’s Klarna.
“Grover is an alternative for people who have the need to pay later, or don’t want to have a big cash expenditure today, and don’t want debt,” said Cassau. “It’s solving a lot of the problems that customers who overuse Klarna and wake up at some point and say ‘gee, I have this loan, and that loan, and they are all piling up against each other.”
Cassau said Grover’s renters are looking for flexibility with subscriptions starting at just a month and the average rental lasting around 10 months. That flexibility comes at a price though with an Apple Watch Series 6 rental costing $327 (€274) spread over a year via Grover compared to the $510 (€429) upfront cost from Apple, according to Grover and Apple’s listings.
The Berlin-based startup founded by former Rocket Internet graduate Cassau in 2015, raised a $31 million Series A round in 2018, and a $45 million pre-Series B round in 2019, from investors including Augmentum Fintech, Circularity Capital, Seedcamp and Samsung Next.