Back Market has raised a $120 million round of venture capital as it seeks to dramatically expand the market for refurbished consumer electronics. The investment round included Goldman Sachs, Aglaé Ventures, Eurazeo Growth, and Daphni and follows rounds of $48 million in 2018 and $7 million in 2017.
The Paris-based startup has created a marketplace to connect companies that restore used gadgets with consumers through a one-stop shopping experience, complete with warranties and customer service. While the company has seen meteoric growth, particularly since its expansion to the U.S., overall sales of used gadgets remain small compared to those of brand-new devices.
Cofounder and CEO Thibaud Hug de Larauze said the company’s long-term goal is to make refurbished devices the majority of consumer purchases. This feeds into its ambition of promoting the circular economy and reducing the tech industry’s impact on the environment.
“We are a mission-driven company,” said Hug de Larauze. “Our mission is to make the circular economy first. It’s clearly not the case yet, so we have a lot of work to do.”
Hug de Larauze estimates that the consumer electronics industry sold $1.3 trillion in devices in 2019, compared to just $80 billion for the refurbished industry. Still, Back Market has been more than doubling sales over the past year, an indication that consumers are increasingly willing to give restored devices a look.
Founded in 2014, the company certifies sellers who restore devices such as smartphones, laptops, tablets, and desktop computers. By offering a quality guarantee and a centralized purchasing site, Back Market has reduced the friction for consumers looking for such options, Hug de Larauze said.
The company expanded to the U.S. in 2018 and says the country is now its fastest-growing market. Back Market is currently in a total of eight countries: France, Spain, Germany, Italy, Belgium, the U.K., the U.S., and Austria.
Beyond the size of the latest round, Goldman Sach’s participation will be critical to Back Market’s plan to expand in the U.S. via more partnerships and marketing. Plans include offering local repair options for devices purchased through Back Market, and the company has created a Back Care service that works with refurbishment partners who also do after-sale repairs.
With Back Care, a San Francisco customer might buy an iPhone from a refurbisher in Texas. But if the device needs warranty service, they can bring it into a Back Market refurbishment partner near their home in California.
“We want customers to find a very fast and easy solution to either repair or swap the product,” Hug de Larauze said. “Ultimately, you want people to say there is no point in buying new because refurbished is just as good. And it’s better on price, it’s better on quality, it’s the same level of warranty, and it’s better in terms of ecological impact.”
The company also plans to use the latest funding to create a dedicated machine learning team to improve its buyer-seller matching algorithms. Back Market is looking at expansions into the Netherlands, Finland, and Poland over the next few months. It has also started to expand its product lineup by offering some refurbished appliances, such as heaters, fryers, and mini-ovens.