The question does not surprise Michael Cassau at all. It is also obvious. Why should it work for his start-up that big companies like Otto and Tchibo failed to do: turn it into a product rental business instead of selling it. “Companies stop too early”, he replies without hesitation, “they have large sectors of activity which are doing well”. If a new idea doesn’t work right away, it often isn’t pursued with the right vigor.
In his company Grover, it’s different, explains the founder and boss Cassau. “If the whole business is focused on an idea, then you have to iterate it, and then you invest in it.” For Cassau, this requires above all a clear orientation. The company’s mission is to simplify access to technological products. You learned a lot along the way: “At first we only had the pay-as-you-go model,” which is a certain amount per month that was the same for everyone. “But it was too cheap for those who only rented one month and too expensive for those who rented twelve months.” This is why there are now multi-tier subscription models.
The most popular products are smartphones, tablets and computers. The pandemic hasn’t hurt the business, but seasonality has changed. While the equipment that you can use in your spare time and on vacation was rented out in the summer, during the pandemic it is more about home products, like a television. Despite the current semiconductor shortage, Grover had no delivery problems, also because they had established relationships with many manufacturers.
For boss Cassau, it is important to clearly focus on technical devices – always
475,000 devices are currently leased, with new money and a changed business structure, Grover wants to increase the number to five million by 2024 – more than tenfold. The last funding round in March went from 70 to 100 million US dollars. That alone would not have been enough for the lofty goals. That’s why Grover has also introduced a special purpose vehicle. This buys the devices that need to be rented. The company has raised a billion euros in debt. The devices purchased serve as collateral, which is called asset-backed financing.
A new rental company also takes care of the rental. Above is the Grover platform. In the long run, says Michael Cassau, he can imagine that Grover, with its vast expertise in the rental business, will also lend products outside of the technical area. At the moment, however, a clear focus is very important to Cassau – the lack of focus was also one of the reasons other companies’ loan plans didn’t work out.
And what happens to devices when customers return them? Employees clean and repair them as necessary, and data is deleted as necessary. They are then available for other loans. Many customers, for example, rent a slightly older smartphone, which is much cheaper than a brand new one. An iPhone 12 Pro Max with 256 gigabytes of storage costs 64.90 euros per month with a twelve-month contract, an iPhone 8 with 64 gigabytes costs 19.90 euros per month.
Grover, which now has 275 employees, currently offers its services in Germany, Spain, Austria and the Netherlands. “We want to launch a few more countries,” says Cassau. The main objective, however, is “to intensify our presence in existing countries. We still see a lot of potential there ”.
Grover is just one example of how the German and European start-up scene is increasingly being noticed by investors. Munich-based software publisher Celonis recently raised $ 1 billion and is now worth $ 11 billion. The car manufacturer Porsche has joined the young aerospace company Isar Aerospace from Ottobrunn near Munich. In total, the company received nearly 140 million euros in its fundraising.