Berlin-based startup topi has raised $45m in equity and debt financing for its hardware subscription platform in a funding round co-led by Index Ventures and Creandum. The company helps businesses rent equipment like smartphones, desk screens and coffee machines from retailers and manufacturers.
What does topi do?
- Topi is building payments infrastructure to let merchants offer hardware subscription models to businesses. The platform vets eligible buyers automatically and in real time, allowing them to rent equipment or purchase a subscription and checkout online without any paperwork.
- Being asset-light has several advantages for businesses who might choose to rent; they can respond faster to a changing market and consequently reduce risk, and can “achieve scale without having to invest capital and yield cashflow advantages”, says topi cofounder Charlotte Pallua.
- Topi declined to specify how many customers it's got. But it does say that it has a “full pipeline of partners” and has already secured a partnership with large German electronics retailer GRAVIS.
- Pallua and her other cofounder, Estelle Merle, see topi as part of the solution to the 50m metric tons of electronic waste (that’s 7kg per person) that ends up in landfills every year. The company's partnered with trade-in merchants specialising in refurbishing devices and reselling them on the secondary market. The idea is for all used devices rented on topi to be refurbished and sold on or "properly" recycled.
Who’s investing in topi?
- Index Ventures co-led the round with Creandum, and participation from TriplePoint Capital.
- The funding follows topi’s $4.5m seed round in December 2021 which was also co-led by Creandum and Index Ventures, with participation from TriplePoint Capital.
- Angel investors including HelloFresh cofounder Dominik Richter and N26 cofounder Max Tayenthal also participated in topi’s seed round.
What’s the hardware-as-a-service market like?
Rent rather than buy is a growing trend among consumers, as evidenced by the number of companies — such as Grover, a Berlin-based unicorn that rents out electronics to individuals and businesses and raised $330m in April — popping up to meet this societal shift.
There’s also Everphone, a smartphone as a service provider, Klarx, which rents out machinery online, and Lendis, a flexible workspace aggregator.
Pallua says most hardware-as-a-service competitors only operate in one industry and are often in direct competition with traditional retailers and manufacturers. Hence topi is trying to provide the infrastructure to enable renting, instead of holding inventory and renting out equipment itself.
What will the funding go towards?
- Merle says topi will keep investing in its “incredible team” and hiring the best talent.
- As its commercial operations begin to kick off, topi will use the money to “further deepen” its partnerships and secure new ones.
- It will also use the funding to expand into different asset classes and markets.
Consumers are already well attuned to the concept of the subscription model — with many subscribing to Netflix, Spotify, bike-rental platforms like Swapfiets or meal-kit providers like Gousto or HelloFresh — and businesses have already adopted software-as-a-service models in place of on-premise models. It would make sense for the subscription trend to follow into hardware.
There are clear benefits for businesses with renting rather than buying: with fewer assets, they can save costs and be more operationally efficient. But will clients get on board with the idea of renting refurbished products rather than buying fresh ones?