Fresh funding for electronics reseller outlines key market for startups in Europe
The Paris-based company raised $510 million in its latest funding round. The investment was led by Sprint Capital, a London-based investment firm that counts online payments company Revolut, among its other technology-company holdings.
The new $5.7 billion valuation is a nearly 80% jump from the back market of $3.2 billion it received in May, when it raised $335 million. The growth underscores the key market for startups in Europe, which was previously seen as one in the tech universe as well.
Also joining the investment round were General Atlantic, an existing investor in the e-commerce operator; urazio,
a Paris-based private-equity firm; Agle Ventures, the venture-capital arm of luxury titan Bernard Arnault; and Generation Investment Management LLP of London.
BackMarket, based in Europe, has earmarked new funds to double its workforce size in the US this year to nearly 100, and to increase its total global workforce from 350 to 1,000. It entered the US in 2018 and is expected to generate triple-digit annual revenue growth this year, said its co-founder and chief executive Thibaud Haug de Larouz.
Refurbishers and brands sell directly to consumers through Backmarket.com and the company earns a commission on each sale. The company does not make financial disclosures.
The investment bets on rising consumer demand for products that reduce electronic waste and offer discounted prices, especially at a time when inflationary pressures are mounting.
“Increased sales of new electronics and increasing pressure to remove these devices from landfills have created a huge opportunity for the back market to win more business,” said Henrik Persson, managing partner at Sprints.
According to a United Nations report published the following year, electronic waste contains toxic additives and hazardous substances such as mercury, yet only 17.4% of 2019’s e-waste was collected and recycled.
The back market competes with US-based platforms such as Swappa and EcoATM International Ltd. But unlike some of its competitors, all of its items come directly from certified refurbishers, distributors, and brands.
The company says the defective rate for devices sold on the back market’s platform is around 4%, which is roughly equal to the average unofficial rate for new devices. All purchases come with a contractual warranty that allows buyers to return defective equipment for a full refund.
The company hopes that the refurbished electronics can mimic the second-hand car market. Refurbished appliances represent approximately 6% of total global annual sales of electronics. By comparison, about 70% of the cars purchased are used, Mr. Hug de Larouz said.
Write Ben Dummett [email protected] . Feather