Why we invested: Grover (the impact unicorn tackling e-waste)
Jake Levy, Senior Investment Manager, Snowball
Tue 13 December 2022
Our thesis that impactful companies can outperform has been borne out by the recent performance of our private equity portfolio, which – in turbulent times – has delivered a net return of 19% over the last 12 months.
For example, one of our private equity managers, Circularity Capital, invests in circular economy companies where sustainability gives them a competitive advantage. Alongside a clear environmental imperative to reduce virgin product production and waste, the economic benefits of circular models are often characterised by stable margins, higher quality earnings, stickier customer relationships and strong growth trajectories.
A good example is Grover which rents consumer electronics, such as phones, camcorders and gaming consoles. The company demonstrates that company growth and impact can be mutually reinforcing as a circular solution is more attractive for consumers in a cost-of-living crisis. This means Grover continues to thrive despite the challenging macroeconomic outlook, expanding outside of Germany into Austria, Switzerland, Spain, the Netherlands and the US, and has circulated more than 1,000,000 to customers.
The company achieved “impact unicorn” status at its funding round earlier this year, and we are excited for its growth prospects as it expands into new markets, notably the US.
As Grover scales, so does its impact. Over 20 million tonnes of e-waste are produced annually. Grover’s business model addresses this challenge by replacing the traditional linear, “take-make-dispose” model of production and consumption by providing customers with access to technology products in “as new” condition. This means taking back a product after each customer cycle, refurbishing, upgrading and repairing it, and then leasing it to another user.
This model enables Grover to deploy a single product to a number of different customers (3.5 on average) and improve asset utilisation. This generates superior financial returns in parallel with enhanced resource productivity when compared to a traditional “one-product-to-one-customer” sales model.
This challenges the “planned obsolescence” design for products which have an artificially limited useful life to increase sales volumes by reducing the time between repeat purchases. Grover is showing there is another, more sustainable path. We believe that such change, in the long run, can be genuinely systemic.
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