Hardware doesn’t scale? As Swappie raises a €108m Series C, we look back at our first investment

15.2.2022 – Lauri Kokkila

Swappie, the leading end-to-end online destination for buying and selling refurbished smartphones, today announces a €108M ($124M) Series C funding round.

Today marks 30 months since leading the €4.5m Series A investment in Swappie, and we are pleased to announce that we have joined their 108m Series C, led by Verdane with participation from all existing investors. 

A lot can happen in 30 months, so it’s worth looking back at our decision at the time and reflect on what has made Swappie so successful. 

In 2018, we started hearing stories about two guys that have been iterating business ideas like crazy. After 17 ideas, they decided to go fullon selling refurbished iPhones from a basement in Töölö. Rumours said they were incubating ideas with ruthless build-measure-learn methodology and were interviewing people in Kamppi shopping center about their phone purchasing behaviour.

After founder Jiri Heinonen politely declined my lunch invite for couple of months (too focused on execution!), we finally met “for a proper meeting” in November 2018. The first slide showing MoM revenue growth proved they were on to something.

When discussions went further with our team, we were especially bullish about three things: 

Inventure Swappie

  1. Data-driven and execution-focused team 

At the time of investment, the founders and extended management team showed impressive understanding of the business with data. When attacking a competitive market, we see that execution capability, endless optimism, and focus is critical. It was similar to the execution focus we saw at Wolt. 

Sami & Jiri’s natural drive for growth has become a core part of Swappie today. But it’s not only about the founders, it’s about impressive hires like Lauri Lipsanen, Jori Ahvonen, Emma Lehikoinen, Otso Ojanen, Jorrit Nagelsmit, Pekka Vanne & Marja Kontiokari joining the management, and an entire team of 1000+ people are locked into execution. Despite challenges we face, we can always be certain the team will question themselves and go deep in understanding the root causes of problems, and then solve them with the highest standards.  

The results on growth are nothing short of amazing. Revenue has increased from 8M€ in 2018 to 31M€ in 2019, 98M€ in 2020. The preliminary results from 2021 show an impressive growth. Hardware doesn’t scale they say. 

  1. Market opportunity

As we wrote in our longer internal memo at the time of investment, European smart phone market is 102B€ today, and the used smartphone market has only 10% market share compared to 50+% in cars.” The refurbished electronics sector is still very underdeveloped, and we are just scratching the surface here.

Swappie is structurally different compared to other players in the market. First, instead of initially spreading thin into multiple categories, Swappie is laser-focused on iPhones. Second, Swappie controls the whole value chain end-to-end,including their own refurbishment operations in Helsinki & Tallinn. This strategy has ensured Swappie can offer consumers more affordable smartphones, reduce waste through smarter use of materials. Compared to P2P marketplaces, Swappie offers consumers a much more trustworthy option for buying used and refurbished smartphones.  

  1. A focus on sustainability

You don’t need to paint Swappie’s logo green to understand the positive impact they are making on the climate. About 95% of smartphones’s CO2 emissions are caused during the production of new mobile phones, and the longer we can keep smartphones working, the better it is for the environment.

At Inventure, we’ve made sustainable resources one of our core investment themes. That may sound like another VC firm greenwashing their mission, but cases like Swappie show there’s a huge business case that we want to explore fully. I’ve seen personally how Swappie’s sustainability focus has been a crucial factor to help them to hire great talent, attract funding, and provide the best choice for the growing share of sustainability-focused customers. 

For any other entrepreneurs that have already iterated 16 business cases like Jiri and Sami, we definitely want to hear about the 17th where you’re focused on sustainable resource choices. We are humbled by the opportunity to be in venture with Swappie, and will keep doing so as we shift gears to the next stage! 

Working on something amazing? Shoot me an email lauri@inventure.vc.

Want to actually work on reducing CO2 of electronics? Join Swappie!

Lauri Kokkila
Investment Director