The question does not surprise Michael Cassau in the least. It is also obvious. Why should it work for his start-up that large companies like Otto and Tchibo have not managed to do: turn it into a business of renting out products instead of selling them. “The corporates stop too early,” he replies without hesitation, “they have big business areas that are doing well.” If a new idea doesn’t work right away, it is often not pursued with the right vigor.
At his company Grover it is different, says founder and boss Cassau. “If the entire company is focused on one idea, then you have to iterate, then you invest in it.” In Cassau’s view, this first and foremost requires a clear direction. The company’s mission is to simplify access to technology products. You learned a lot along the way: “In the beginning we only had the pay-as-you-go payment model,” that is, a certain amount per month that was the same for everyone. “But that was too cheap for those who only rented for a month and too expensive for those who rented for twelve months.” That is why there are now tiered subscription models.
The most popular products are smartphones, tablets and computers. The pandemic did not harm the company, but the seasonality has changed. While equipment that you can use in your free time and on vacation was rented in the summer, during the pandemic it is more products for the home, such as a television. Despite the current shortage of semiconductors, Grover does not have any delivery problems, also because it has established relationships with many manufacturers.
For boss Cassau, the clear focus on technical devices is important – for the time being
475,000 devices are currently rented, with new money and a changed company structure Grover wants to increase the number to five million by 2024 – more than tenfold. The most recent financing round in March was increased from 70 to 100 million US dollars. That alone would not have been enough for the ambitious goals. That is why Grover has also set up a special purpose vehicle. This buys the devices that are to be rented out. The company raised one billion euros in debt. The purchased devices serve as security, a so-called asset-backed financing.
A new rental company also takes care of the rental. Above is the Grover platform. In the long term, says Michael Cassau, he can imagine that Grover, with his extensive know-how in the rental area, will also lend products outside of the technical area. At the moment, however, the clear focus is very important to Cassau – the lack of focus was also one reason why loan projects from other companies did not work.
And what happens to the devices when customers send them back? Employees clean and repair them if necessary, and the data is deleted if necessary. They are then ready to be borrowed again. There are many customers who, for example, rent a somewhat older smartphone, which is considerably 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 focus, however, is on “intensifying our presence in the existing countries. We still see a lot of potential there.”
Grover is just one example of the fact that the German and European start-up scene is increasingly being noticed by investors. The Munich software company Celonis recently raised a billion dollars and is now worth eleven billion dollars. The car manufacturer Porsche has joined the up-and-coming space company Isar Aerospace from Ottobrunn near Munich. In total, the company received almost 140 million euros in its financing rounds.