A new company is aiming to do for B2B hardware sales what a growing number of companies are doing in the consumer space by making it easier for businesses to pay for equipment in installments through leases and subscriptions.
While the companies like Klarna and Affirm has been pressed payment services that help users get goods without having to pay for everything upfront, a Berlin-based startup Melt fired from stealth last December with $4.5 million in funding to do something similar for B2B transactions. At the time, Topi was a little vague about what its actual product would be, but today the company announced its first product in partnership with the German electronics retailer Gravisand raised $45 million in new equity and debt financing.
Hardware as a Service
At its most basic level, Topi sells a hardware-as-a-service business model, allowing merchants to rent out their equipment such as smartphones, printers, computer monitors, coffee machines, robotic arms, or whatever industry-specific machines they specialize in. it’s true that many merchants already offer financing options that allow businesses to spread their payments, this isn’t usually integrated directly into the checkout process – and that’s what Topi brings to the table.
The problem, ultimately, is that companies can spend thousands of dollars up front on physical goods essential to their operations, leaving them with limited capital for other business-critical purchases. Also, the products they buy may be out of date or obsolete in just a few years.
In tandem with businesses across the industry tightening their wallets due to economic pressures, marketers will be looking for new ways to encourage their customers to keep spending money, even if it means on slightly different terms.
Topi essentially brings together the various components a seller might need to offer hardware subscriptions, including insurance providers, logistics and refinancing, so that merchants can easily embed rentals into their existing online channels using the API of Tops. 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 might decide to upgrade to the latest MacBook model, return the device or pay the remaining balance to own the laptop outright. In the future, Topi will also offer Klarna-style installment 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 pre-purchases, so a customer can decide to lease an iPhone at checkout for a period of two years while buying a laptop outright. Topi is presented as a modular platform so that merchants can choose which elements they want – they can choose from just monthly invoicing and credit checks, to the full package, including refinancing and insurance partners.
Additionally, while Topi branding is prominent at checkout with the introductory product, the company said it plans to offer a white-label version that allows businesses to include their own logo.
Access to the property
A quick look at the consumer technology landscape reveals a steady shift from ownership to access. This is proven in areas such as music, where subscription streaming services from the likes of Spotify and Apple Music now surpass sales in physical format or download. And the so-called circular economy stimulate demand for consumer electronics rental this includes smartphonesand even car subscription services.
There is evidence of this shift elsewhere in the Munich-based B2B space as well Klarx specialized in the rental of construction equipment. So it’s clear there’s a movement away from ownership, something Topi co-founder Charlotte Palua said other marketers need to take note of if they want to stay ahead of the curve.
“If traditional retailers want to stay competitive and not lose customers to these retailers, they’re going to have to start offering subscriptions as a payment option,” Palua told TechCrunch.
Pallua previously 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 the reports keep coming that the Cupertino company is still looking to increase its recurring revenue through such subscriptions. Palua met his co-founder Estelle Merle while at Harvard Business School in Boston, and the duo cemented their friendship in Silicon Valley, where Merle worked briefly at Tesla during his MBA before landing at German mobility startup Via.
One year after their founding, Pallua and Merle are now ready to launch their business in partnership with Gravis, an authorized Apple distributor that has 40 physical locations in Germany in addition to its online store. Gravis was a key partner as Topi iterated its product through its pilot phase.
“We are thrilled that our business customers can now easily subscribe to their IT equipment in real-time at the time of the transaction, without tedious processes and red tape,” Gravis managing director Jan Sperlich said in a statement. “In our pilot phase, about half of our customers who rented hardware through Topi returned for additional products.”
But perhaps more importantly than all of this, Topi isn’t just focused on improving access to hardware or helping companies’ cash flows – they see sustainability as a major selling point behind their product.
“In light of climate change, sustainability is increasingly important for companies,” Palua 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 is $15 million in equity and $30 million in debt, with backers including Index Ventures, Creandum, TriplePoint Capital and undisclosed angel investors.