Michael Cassau, Grover – Successfully Raised EUR 41 Million In Pre-Series B Round
Grover series 15mlundentechcrunch Michael Cassau is fascinated by the intersection of retail and finance and is motivated by a personal conviction that there must be a flexible and efficient way to access consumer goods. He founded his company Grover in 2015 with a simple goal in mind: To give people more freedom and help them maximize value by offering a flexible and affordable way of accessing technology – through monthly rentals.
Built on a circular economy business model, Grover makes the most out of the lifecycle of tech products, reduces waste, and brings the philosophy of access over ownership to the vast consumer electronics market. Michael has a background in economics: Before founding Grover, he worked as an Investment Professional with Goldman Sachs, where he acquired in-depth insight into the mechanics of the financial system. Later, he was Co-Founder and MD/Head of Roll Out and Operations at Rocket Internet. Michael studied Economics and Finance in Heidelberg and Copenhagen.
Grover is one of Europe’s market leaders in technology rentals, bringing the access economy to the consumer electronics market, by offering a simple, monthly subscription model for the best in tech. Grover is the first financing company for the circular economy, breaking the link between ownership and use, and buying products, so people don’t have to. Private customers, as well as businesses, get access to a wide range of over 2,000 tech products, including smartphones, laptops, virtual reality (VR) gear, and wearables, profiting from the flexibility and full usage rights at a fraction of the purchase price.
Rentals are available in Germany on Grover.com and through Grover’s broad online and offline partner network, including Europe’s leading electronics retail group, MediaMarktSaturn, as well as Gravis, Conrad, and Tchibo. As of 2019, Grover is also active in Austria with its own online platform Grover.com/at. The Grover service allows its users to keep, switch, buy, or return products depending on their individual needs, to maximize the value of their tech in their lives.
Grover falls under the access over ownership movement, which also allowed companies such as Netflix, Airbnb, and Spotify to grow and succeed. With a total financing volume of EUR 103 million to date and over 100 employees, Grover is one of Germany’s best-funded startups.
In an exclusive interview with AsiaTechDaily, here’s what Mr. Michael Cassau said about successful fundraising:
“Usually, it’s getting investors comfortable with the business model – especially when it’s particularly disruptive –, its market potential and competitive advantages. Investors often show extreme herd behavior, so it is really helpful to get high-profile investors in early, to create maximum ‘FOMO’ among others, who will feel – in the ideal case – like they might be missing out on the next Google.”
Read on to know more about Michael Cassau and his successful journey.
Please tell me about your background, and what are you working on currently?
Michael Cassau: Originally, I’m an economist, so I think of most things in economic terms – frequently in terms of marginal utility and value. I studied Economics and Finance in Heidelberg and Copenhagen. I have a background in Investment Banking at Goldman Sachs and also spent some time as Managing Director and Head of Roll Out and Operations at Rocket Internet. After that, I founded Grover in 2015 and haven’t looked back since – One of our key working principles at Grover is what we call “running to the future.” We want to be first-movers, constantly pushing boundaries and creating the most innovative and future-oriented service possible. Currently, we’re working on scaling and expanding Grover to bring the tech rental revolution to as many people as possible.
What motivated you to get started with your company?
Michael Cassau: I founded Grover in 2015 after lacking the possibility of a flexible means of accessing consumer goods. At the time, I moved from London to Berlin for what was planned to be just a few months. I, therefore, had to furnish an apartment short-term for the first time, which I felt was a rather inefficient use of my capital. I realized that I could rent cars, music, and movies-on-demand instead of having to buy them, but didn’t have similar options for things like tech. That’s how the idea for Grover was born. Grover is my answer to the access-over-ownership movement, which has allowed companies such as Netflix, Airbnb, and Spotify to grow and succeed and which emphasizes access to products instead of permanent ownership. My greatest motivation behind founding Grover, however, is a personal conviction that there must be a flexible and efficient way to access consumer goods. Grover has the simple goal of giving people more freedom and helping them derive more value by offering a flexible and affordable way of accessing technology.
How have you attracted users and grown your company from the start?
Michael Cassau: Initially, we relied heavily on word-of-mouth marketing to attract users. We also had the major advantage of being a first-mover in the consumer electronics rental-commerce space – At the time of our launch, no true competitor service existed. Grover was the first platform in Germany to offer consumer tech rentals on a monthly subscription basis. We have since built the best product in our category, offering consumers a simple way of accessing the best in tech at a fraction of the purchase price.
Once we started gaining traction among users, we began to invest more heavily in online and social media marketing to promote our service and gain new users. We also started working with a PR agency early on to help us with corporate communication and our media presence. Our partnerships with the biggest German consumer electronics retailers (MediaMarktSaturn, Conrad, and Gravis) have also helped us gain visibility and credibility among German consumers, boosting our growth.
What’s your business model, and how have you grown your revenue? What strategy worked best?
Michael Cassau: Grover offers its users maximum flexibility in the use of tech products. The focus of Grover’s service is on the use-value of each device, not its asset or market value. When you rent with Grover, you pay for and use a device only for as long as you really benefit from it. Afterwards you simply send it back. There are no hidden fees or commitments. This is the core of our business model. And that is not only financially efficient and sustainable, but it also frees customers from bothersome paperwork. The rental period can be adapted to each customer’s respective usage, and life situation and thus does not create long, unwanted ties and dependencies.
In terms of revenue growth, we have consistently expanded our product range to provide Grover’s customers with access to any and all consumer tech products they might be looking for. Additionally, we have iteratively improved and adapted the Grover service over the years, in order to nurture long-term relationships with our users. For example, we introduced a buying option in 2016 after realizing that many users valued having this possibility available to them. We also introduced different rental-length-options in 2018, moving away from a “pay-as-you-go” monthly subscription, and giving users added flexibility.
How much money (funding) have you raised in total so far? When was the recent funding round?
Michael Cassau: To date, Grover has raised EUR 103 million in funding. Our most recent round was our EUR 41 million Pre-Series B round, which we closed in October 2019. We are one of Germany’s best-funded startups.
How do you decide when to go out for fundraising? What were the internal decision processes in determining when to begin fundraising, and what were the logistics for this?
Michael Cassau: We usually start preparing a fundraise when it becomes clear that fresh capital will be needed in 9 to 12 months.
How many investors have you met so far, and which among them have invested in your past funding rounds? And how long does it take on average to finalize each funding round?
Michael Cassau: We have met around 100 VCs so far – over the course of various rounds – out of which a total of 10 ended up investing. It usually takes 5 to 8 months from an initial investor-approach to having money in the bank, so it’s better to start early so as not to run into a cash crunch.
How did you meet these investors, and which channels worked best for you?
Michael Cassau: For us, the best way to meet our eventual investors was via an introduction by another investor, startup, or another person that is close to them. What has also worked well has been meeting people at conferences and events. Cold, unsolicited emails and calls have, in our experience, the lowest success rate as every VC gets bombarded with hundreds of those each week.
What are the biggest challenges you’ve faced and obstacles in the process of fundraising? If you had to start over, what would you do differently? (Your insight or advice on this would be very helpful for startups)
Michael Cassau: Usually, it’s getting investors comfortable with the business model – especially when it’s particularly disruptive –, its market potential and competitive advantages. Investors often show extreme herd behavior, so it is really helpful to get high-profile investors in early, to create maximum ‘FOMO’ among others, who will feel – in the ideal case – like they might be missing out on the next Google.
What are your milestones for the next round? And what are your goals for the future?
Michael Cassau: We are currently working on our next big funding round, which is set to close by Q1 2020. By then, we plan to have maximized our product-market fit and launched in at least one further European market – after successfully launching in Austria in September 2019. Beyond this, our goals for the continue to expand internationalization, introduce brand new service offerings, and establish new retail partnerships.