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Topi raises $45M to bring hardware subscriptions to B2B merchants – Technology Flow

The new company is looking to do for B2B hardware sales what a growing number of companies are doing in the consumer sector by making it easier for businesses to pay for equipment in installments through rentals and subscriptions.

While companies like Klarna and Affirm promote payment services that help consumers buy things without having to pay for everything upfront, Berlin-based startup Topi It launched in secret last December with $4.5 million in funding to do something similar for B2B transactions. At the time, the hat was somewhat vague as to what its actual product would be, but the company today announced its first product in partnership with German electronics retailer Gravis and unveiled a fresh $45 million in equity and debt financing.

Hardware-as-a-Service

At the most basic level, Topi is selling a hardware-as-a-service business model, allowing merchants to rent out things like smartphones, printers, PC monitors, coffee machines, robotic arms, or industry-specific machines they specialize in. In. While it’s true that many merchants already offer financing options that allow businesses to stagger their payments, this is typically not integrated directly into the checkout process — and, effectively, the hat is being brought to the table.

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Topi Payment Methods

The problem, ultimately, is that companies can spend thousands of dollars on physical items essential to their operations, leaving limited capital for other business-critical purchases. On top of that, the products they buy may be outdated or obsolete in just a few years.

As businesses across the industrial spectrum tighten their purse strings due to economic pressures, marketers are looking for new ways to encourage their customers to keep spending money, albeit on slightly different terms.

Topi essentially brings together various vendor-supplied components of hardware subscriptions, including insurance, logistics and refinancing providers, so merchants can easily build rentals into their existing online channels using Topi’s APIs. So for example, an electronics retailer might offer a €1,000 MacBook Air with a three-year full warranty for a monthly fee of €26.25, after which the customer can decide to upgrade to the latest MacBook model, return the device, or pay the rest to own the laptop outright. In the future, Hati will also offer Klarna-style installment payment options for customers who know in advance that they want to eventually own the product.

It should be noted that Hat also supports advance purchases, so that a user can decide to rent an iPhone for two years at checkout while purchasing the laptop outright. Topi is designed as a modular platform so merchants can pick and choose what they want – they can choose from just monthly billing and credit checks to the full shebang, including refinancing partners and insurance.

Additionally, while the hat’s branding will be prominent at checkout with the initial product, the company said it plans to offer a white-label version that allows businesses to include their own logo.

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Hat: Like Klarna for B2B transactions

Access on Ownership

A quick look across the consumer technology sector reveals a steady shift from ownership to access. This is evidenced in fields such as music, where subscription streaming services from the likes of Spotify and Apple Music are now outpacing physical format or download sales. And the so-called circular economy is fueling demand for consumer electronics rentals that include smartphones and automobile subscription services.

There is evidence of this shift in the B2B space as well, with Munich-based Clarks specializing in construction equipment rentals. So it’s clear there’s a movement away from ownership, which other traders must take note of to stay ahead of the curve, said Topi cofounder Charlotte Pallua.

“If traditional retailers want to be competitive and not lose their customers to those retailers, they need to start offering subscriptions as a payment option,” Pallava told Technology Flow.

Pallava previously worked as a strategy and business development manager at Apple in the San Francisco Bay Area, where she led a team exploring the feasibility of hardware subscriptions — Apple has yet to launch such a service, but reports say Cupertino will. The company is still looking to increase its recurring revenue through such subscriptions. Pallava met her cofounder Estelle Merle while at Harvard Business School in Boston, and the two cemented their friendship in Silicon Valley, where Merle landed a stint at Tesla during his MBA and landed at German mobility startup Via.

A year after its foundation, Pallava and Merle are now ready to launch their businesses in partnership with Gravis, an Apple authorized reseller that has 40 physical outlets in Germany in addition to their online store. Gravis was a key partner as the hat iterated its product through its pilot phase.

“We are delighted that our business customers can now easily subscribe their IT devices during transactions, without tedious processes and bureaucratic paperwork,” Gravis managing director John Sperlich said in a statement. “During our pilot phase, half of our customers who rented hardware through Topi returned for additional products.”

But arguably most important of all, Hat isn’t just focused on improving access to hardware or helping companies’ cash flows — they see sustainability as the main selling point behind its product.

“In light of climate change, it’s becoming increasingly important for companies to be sustainable,” says Pallava. “Used equipment should be given a second life or properly recycled – no more a drawer full of old equipment.”

Topi’s funding round included $15 million in equity and $30 million in debt, with backers including Index Ventures, Crendom, Triple Point Capital and Unclosed angel investors.

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