Refurbished iPhone Seller Back Market Hits $5.7 Billion Valuation

The company, based in Paris, raised $510 million in its latest funding round. Leading the investment was Sprints Capital, a London-based investment firm that counts online payments company Revolut among its other technology-company holdings.

The new $5.7 billion valuation is almost an 80% jump from the $3.2 billion level Back Market achieved in May, when it raised $335 million. The increase underscores the heady market for startups in Europe, which had previously been seen as an also-ran in the tech universe.

Also joining the investment round were the e-commerce operator’s existing investors, General Atlantic; Eurazeo, a Paris-based private-equity firm; Aglaé Ventures, the venture-capital arm of luxury titan Bernard Arnault; and London’s Generation Investment Management LLP.

Back Market, based in Europe, has earmarked the new funds to double the size of its staff in the U.S. to about 100 this year and to boost its total global employee count by 350 to 1,000. It entered the U.S. in 2018 and expects to generate triple-digit annual revenue growth this year, said Thibaud Hug de Larauze, its co-founder and chief executive.

Refurbishers and brands sell directly to consumers through Backmarket.com and the company earns a commission on each sale. The company doesn’t disclose financials.

The investment is a bet on growing consumer demand for products that reduce electronic waste and offer discounted prices, particularly at a time when inflationary pressures are increasing.

“The sales growth of new electronics and the mounting pressures to divert these devices from landfills creates a massive opportunity for Back Market to win more business,” said Henrik Persson, Sprints’ managing partner.

Electronic waste contains toxic additives and hazardous substances such as mercury, yet only 17.4% of 2019’s e-waste was collected and recycled, according to a United Nations report published the following year.

Back Market competes with U.S.-based platforms like Swappa and ecoATM International Ltd. But unlike some of its competitors, all of its items come directly from certified refurbishers, distributors and brands.

The defective rate of devices sold over Back Market’s platform is about 4%, almost on par with the average unofficial rate of new devices, the company says. All purchases come with a contractual warranty that allows buyers to return faulty devices for a full refund.

The company hopes refurbished electronics can replicate the secondhand car market. Refurbished devices represent about 6% of total global annual sales of electronics. By comparison, about 70% of cars purchased are used, Mr. Hug de Larauze said.

Write to Ben Dummett at [email protected]