Topi raises $45M to power hardware subscriptions for B2B merchants
A new company is looking to do for B2B hardware sales what a growing number of companies have been doing in the consumer sphere, by making it easier for businesses to pay for equipment in instalments through rentals and subscriptions.
While companies such as Klarna and Affirm have been pushing payment services that help consumers procure goods without having to pay for everything up front, Berlin-based startup Topi launched out of stealth last December with $4.5 million in funding to do something similar for B2B transactions. At the time, Topi was somewhat vague in terms of what its actual product would be, but the company today announced its first product in partnership with German electronics retailer Gravis, and unveiled a fresh $45 million in equity and debt financing.
At its most basic level, Topi is selling a hardware-as-a-service business model, allowing merchants to rent out their equipment such as smartphones, printers, PC monitors, coffee machines, robotic arms, or whatever industry-specific machinery they specialize in. While it’s true that many merchants offer financing options already that allow businesses to stagger their payments, this isn’t typically integrated directly into the checkout process — and that, effectively, is what Topi is bringing to the table.
The problem, ultimately, is that companies can spend thousands of dollars up-front on physical goods that are essential to their operations, leaving them with limited capital for other business-critical purchases. On top of that, products that they buy might be outdated or obsolete in just a few years.
In tandem, with businesses across the industrial spectrum tightening their purse strings due to economic pressures, merchants will be looking for new ways to encourage their customers to continue spending money, even if it means on slightly different terms.
Topi essentially brings together the various components that a seller might need to offer hardware subscriptions, including insurance, logistics, and refinancing providers, so that merchants can easily build rentals into their existing online channels using Topi’s APIs. So for example, an electronics retailer might offer a €1,000 MacBook Air for a monthly fee of €26.25 payable over three years with a full warranty included, after which the customer can decide to upgrade to the latest MacBook model, return the device, or pay the remainder of the balance to own the laptop outright. In the future, Topi will also offer Klarna-style instalment payment options for customers who know in advance that they want to own the product at the end.
It’s worth noting that Topi also supports up-front purchases, so that a customer can decide to rent an iPhone at the checkout for a two-year period, while buying a laptop outright. Topi is pitched as a modular platform, so that merchants can pick and choose which elements they want — they can select just monthly billing and credit checks, to the full shebang including refinancing partners and insurance.
Additionally, while the Topi branding is prominent at checkout with the inaugural product, the company said that it plans to offer a white-labeled version that allows businesses to include their own logo.
Access over ownership
A quick peek across the consumer technology sphere reveals a steady transition from ownership to access. This is evidenced in fields such as music, where subscription streaming services from the likes of Spotify and Apple Music now outweigh physical format or download sales. And the so-called circular economy is driving demand for consumer electronics rentals that includes smartphones, and even automobile subscription services.
There is evidence of this shift elsewhere in the B2B space too, with Munich-based Klarx specializing in construction equipment rentals. So it’s clear there is a movement away from ownership, something that Topi cofounder Charlotte Pallua said other merchants must take note of if they’re to stay ahead of the curve.
“If traditional retailers want to stay competitive and not lose their customers to those retailers, they will need to start offering subscriptions as a payment option,” Pallua told TechCrunch.
Pallua previous worked as a strategy and business development manager at Apple in the San Francisco Bay Area, where she led a team tasked with exploring the feasibility of hardware subscriptions — Apple has yet to launch such a service, but reports continue to surface that the Cupertino company is still looking to bolster its recurring revenue via such subscriptions. Pallua met her cofounder Estelle Merle while at Harvard Business School in Boston, and the duo cemented their friendship out in Silicon Valley where Merle worked briefly at Tesla during her MBA before landing at German mobility startup Via.
A year on from its foundation, Pallua and Merle are now ready to launch their businesses in partnership with Gravis, an Apple authorized reseller which has 40 physical outlets in Germany in addition to its online store. Gravis was a key partner as Topi iterated its product through its pilot phase.
“We are excited that our business customers can now easily subscribe to their IT equipment in real-time at the point of transaction, without tedious processes and bureaucratic paperwork,” Gravis managing director Jan Sperlich said in a statement. “In our pilot phase, around half of our customers that rented hardware through Topi came back for additional products.”
But arguably more important than all of that, Topi isn’t just focused on improving access to hardware or helping companies’ cashflows — they see sustainability as a core underlying selling point behind its product.
“In light of climate change, being sustainable is increasingly important for companies,” Pallua said. “Used devices should be given a second life or properly recycled — a drawer full of old devices should no longer exist.”
Topi’s funding round constituted $15 million in equity and $30 million in debt, with backers including Index Ventures, Creandum, TriplePoint Capital, and undisclosed angel investors.
TechCrunch+ roundup: Gen Z VCs, choosing a GTM model, crypto crisis communication tips
I’ve always wondered who gets to name demographic cohorts.
My parents were pre-Baby Boomers, which made them part of the Silent Generation. (I’m Generation X, so feel free to ignore me entirely.)
Generation Z is stereotyped as being materialistic, mistrustful and extremely reliant on personal technology. And now that they are entering the ranks of venture capital, one investor says those traits are informing how deals are made.
Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.
Tech investors born after 1996 “have raised funds, garnered social media followings and profited from the Gen Z mentality,” says Andrew Chan, a senior associate at Builders VC.
However, “Gen Z, no matter how you slice it, are still a bunch of kids. Myself included,” he notes in a TC+ guest post. “Good for them. I don’t want to be any part of it.”
According to Chan, too many investors his age rely on “youth, group-think identification and confidence as a substitute for hard work and experience.”
“It might work for now, but if that’s success for my generation of venture capitalists, then I would have rather stayed in my happy little bubble writing geochemistry code at NASA JPL.”
Thanks very much for reading,
Editorial Manager, TechCrunch+
6 ways to make sure your startup is using the right GTM model
Years ago, I borrowed a road bicycle from an acquaintance for a day of touring. It was a mistake.
I’d never used a 10-speed bike before, so I wasted time and energy struggling to ascend hills, much like a startup with a go-to-market model that doesn’t match the stage of their business.
“Before you start scaling any kind of sales model, you need a pipeline to support it,” according to Ali Mitchell and Laura Yao, partners at EQT Ventures,
Getting GTM right is more than following basic best practices: You also need to know “what to do and when to do it.”
How to communicate to your crypto community when things aren’t going well
Because it’s a nascent industry that’s largely unregulated, crypto companies are not generally skilled at crisis communications, and I’m being generous.
When a bank or financial services company experiences a massive security failure or a volatility shock, federal laws dictate how it must communicate with its customers. Crypto startups, however, must rely on their own best judgment.
“There’s little benefit in declaring that the sky is falling and begging your community for investment, but an overly rosy outlook won’t fool anyone either,” says Tahem Verma, co-founder and CEO of Mesha.
The majority of early-stage VC deals fall apart in due diligence
It’s amazing how frequently investors say “no” to startup founders: If 100 early-stage entrepreneurs pitch a VC, maybe three of them will be lucky to get a second meeting.
To find out why simple due diligence is the end of the line for so many hopeful founders, Haje Jan Kamps interviewed Axel Bichara and Tyler Mincey of VC firm Baukunst.
“If you feel the need to write a script and prepare for everything to make a good impression, it’s probably not going to work,” said Bichara.
Investors detail their red (and green) flags for startups seeking venture dollars
To be clear: Most investors want to say “yes.” No one becomes a venture capitalist just so they can stomp on someone’s dreams.
Reporter Rebecca Bellan spoke to several who specialize in climate tech and mobility to learn more about how their thesis has shifted in recent months, and what that means for startups seeking follow-on funding:
- George Kellerman, head of investments and acquisitions, Woven Capital
- Nate Jaret, general partner, Maniv Mobility
- Alexandra Harbour, principal, Prelude Ventures
- Cassie Bowe, partner, Energy Impact Partners
- Andrea Walne, general partner at Manhattan Venture Partners
“Investors are homing in on their thesis discipline as the biggest driver for diligence in today’s environment,” said Walne.
The Long, Leguminous Quest to Give Crops Nitrogen Superpowers
Flush with fresh funds, UK ‘eco laundry’ startup Oxwash spins up growth plans
Oxwash, a UK startup that’s spent the last few years applying high tech processes to shrink the environment cost of dry cleaning and commercial laundry, has trousered £10 million (~$12M) in Series A funding to expand its nationwide footprint.
Currently its service is available in five UK cities: London, Oxford, Cambridge, Bristol and Manchester but — flush with fresh funding — it’s aiming for broader domestic coverage and eyeing a US launch after that.
Oxwash bagged a £1.4M seed back in 2020 — and has now pulled in a total of £15.7M since being founded back in 2017, including from a public equity crowdfunder last year (which netted it £500k from around 320 Crowdcube investors); and via a £2.08M seed top-up.
The Series A was led by Untitled VC, with existing backer Biz Stone (Twitter co-founder) also participating, along with Indeed founder Paul Forster, and Holly and Sam Branson. Other named returning investors include Reckitt venture arm Access VC, Pentland Group, Ascension Ventures, Vala Capital, and Truesight Ventures. While new investors in the round include 8 Dimension Ventures, System Capital Management and Khimji Ramdas LLC.
Oxwash’s alternative spin on commercial laundry includes a “gentle” ‘wet cleaning’ technique to replace dry cleaning which involving the use of biodegradable detergents (rather than “harsh” solvents) — and it also touts reduced water consumption (claiming savings of 4L per 1kg of clothes washed).
Additionally, it uses ozone as a disinfecting agent, to sterilize and deoderize fabrics at lower temperatures than traditional commercial laundry processes.
To ensure economies of scale, the on-demand laundry startup operates its services out of a handful of hubs (currently three) — aka its service center “lagoons” — using a fleet of cargo e-bike and electric vehicles for pick ups and drop offs to minimize its carbon emissions.
In a major development, it’s announcing that it’s gained B Corporation status — and claims to be the only laundry and wet-cleaning company in the world that’s gained this certification for standards of environmental, social responsibility and transparency, bolstering its eco credentials.
Oxwash customers span both businesses and individuals seeking on-demand laundry service (think the likes of individual Airbnb hosts up to NHS trusts). On the b2b side, it says customers include hotels, hospitals, universities, hospitality and circular fashion outlets.
Back in May 2020, Oxwash was reporting “several hundred” business customers and more than 4,000 individual users. Its press release doesn’t offer updated figures (we’ve asked — update — it says it now has 20,000+ customers) but it touts quadrupled revenue in the last 12 months, as well as stating it’s achieved “operational profitability” across its three washing facilities.
The new funding will go on UK expansion, with the startup planning to build a giant, centralized washing facility which it intends to use to service clients “up and down the country”.
It’s also planning a US launch (although, back in May 2020, it was talking about European expansion — so has presumably it’s reconfigured its international growth plans). In response to our question on this, the startup told us: “We are still planning to expand into Europe and the US, and this round of funding will enable us to build a model that is suitable for overseas development. We’ve experienced a quadrupling of revenue in the UK since the pandemic started to recede and have therefore been focused on fostering the development of our home market before executing our expansion with this new funding.”
Other plans for the funding include investment in new methods to further enhance its approach, such as acoustic drying — i.e. using soundwaves instead of heat to dry textiles.
It also mentions potentially applying robotics and computer vision for further optimization of its processes. Expanding on that, Oxwash said: “Our series A funding will allow us to integrate next-gen automation to the washing process — augmenting our expert workforce with robotics to move items through the process and optimise ironing, folding and shipping at scale — for example by using AI to identify materials, and sending this data to our machines rather than relying on human expertise.”
“As we expand and store garments for more brands, we will need smart systems to track garments through our process, which will also use AI vision to identify item type, stains etc,” it added.
Additionally, in the next 12 months Oxwash says it has a goal of completely eliminating scope 1 greenhouse gas emissions from its operations.
Commenting in a statement, CEO Dr Kyle Grant said: “This new funding will be used primarily to develop our technology and invest deeply into the complete decarbonisation of our proprietary washing process. Up to 30% will be used for expanding our software technology capabilities, 30% for the deployment of our nationwide processing facility and the remainder for business development and growth.”
“Starting a business just before a global pandemic and economic crisis is no one’s ideal business plan, and as we all know the needs of consumers and businesses have changed dramatically over the last couple of years. For us, this has meant focusing on building out a solution that is frictionless for our business clients — the last thing they need to worry about is how their laundry will get cleaned.
“BCorp accreditation cements our commitment to responsible business and is another assurance to our customers that we are doing business the right way. It is undoubtedly the most robust certification available to demonstrate our dedication to sustainability and transparency that Oxwash is taking as a high growth company.”
Currently, the startup employs over 80 people and says it’s expecting a 50% boost in headcount in the next year as it pushes to expand services nationwide — scaling out from its existing service bases in London, Oxford, and Cambridge.
Notably, Oxwash’s delivery riders and couriers are fully employed (unlike on-demand delivery platforms that rely on the so-called ‘gig economy’ model) — and it also specifies that all staff are paid in excess of the national living wage.
This report was updated with responses from Oxwash to questions about its customers, expansion and tech plans