There are few European tech companies that have surfed the choppy waters of the past two years’ fraught VC market as much as Back Market. In 2022, the French unicorn, which provides an online platform to buy and sell refurbished electronics, laid off 93 employees (13% of the total workforce) and paused international expansion efforts.
Today, it’s a very different picture.
As Back Market celebrated its 10th anniversary last week, it announced that it will be profitable in Europe for the first time in 2024 — and that it does not plan to raise more funds in future.
“You should never say never but the company is now set up so that we never need to raise funds again,” cofounder Thibaud Hug de Larauze tells Sifted.
He didn’t disclose when Back Market, which is present in 18 countries across North America, Europe and Asia, plans to be profitable company-wide; or how much profit the company will make in Europe this year.
But, with a turnover of €320m in 2023 — 45% more than in 2022 — the cofounder says that Back Market has proven itself to be a resilient business.
“It shows that we didn’t go through these painful processes two years ago for nothing,” he says. “It’s proof that we’re a real business.”
Back Market’s rough patch
Launched in 2014 in Paris, Back Market started off with a period of fast growth and relatively easy experiences of fundraising, says Hug de Larauze.
“The objective was to increase the penetration of refurbished goods in every household. Profitability was not a major preoccupation,” he says.
Offering a platform where consumers can buy refurbished electronics like smartphones, tablets or laptops from certified sellers, the company quickly raised a series of large rounds from investors like General Atlantic and Goldman Sachs.
In 2022, Back Market secured a $510m Series E led by UK growth firm Sprints at a $5.7bn valuation, making it France’s most valuable startup at the time — and bringing its total funding raised to more than $1bn.
“Then in 2022, interest rates increased to 5%, money became expensive and funding dried up,” says Hug de Larauze.
“The equation was no longer: ‘It’s alright, we’ll always be able to access capital in the next 12 or 18 months’. The company had to start being profitable, so that we could fund ourselves."
One thing this meant was cutting costs and layoffs. That year, Back Market let go of 67 people in France and 26 in other countries, mostly in public affairs and marketing. “Of course, it was a cultural shock,” says Hug de Larauze. “It’s still remembered as such.”
He says that several projects were paused, notably the company’s launch in India: “One of the biggest addressable markets in the world, but a completely different universe.” Back Market hasn’t yet opened in the country.
The company also started outsourcing refurbishment services that it previously provided in-house thanks to collaborations with partner repair centres.
“It was a bit of a lesson in growth,” says Hug de Larauze. “You can’t do everything yourself.”
Investing in growth again
Today, Back Market has a workforce of 700 — about as many employees as before the layoffs, but with 45% higher revenues than it achieved in 2022.
The goal is to hit profitability across the company “as soon as possible,” says Hug de Larauze, but the cofounder still plans to invest in Back Market’s growth, particularly in marketing campaigns in the US and Japan.
“In markets that are as deep as these, the most important thing is to make sure that nine out of ten people have a refurbished phone or laptop,” says Hug de Larauze. “While we haven’t achieved this, we’ll keep investing.”
Hug de Larauze says he is also on the lookout for M&A opportunities — with his sights set on companies that are accelerating the transition towards refurbished electronics, such as battery designers.
As well as acquisitions, Back Market will consider participating in funding rounds for promising startups, he adds.
The cofounder declined to clarify whether the company’s valuation has changed since the last fundraise in 2022.
“Our valuation will change when we have a major liquidity event,” he says.
This could take the form of a private equity takeover, says Hug de Larauze, or an IPO — although neither would happen “imminently”.
Would Back Market consider a European listing? “It’s a political question, but I’ll answer,” says Hug de Larauze.
“In the past seven years, an ecosystem has developed in France in a spectacular way [...] But the last step is still missing to enable European companies like Back Market or others to IPO here without asking their shareholders to compromise on the valuation.”
If you want to hear more from Back Market, its UK general manager Katy Medlock will be on stage at Sifted Summit.
