Los Angeles-based consumer goods rental company Joymode raised $ 15 million from one of the technology’s most successful global investment firms, selling itself to an early-stage New York-based investment firm, XRC Labs.
Joymode’s Founder Joe Fernandez will continue to act as a consultant for Joymode as the company focuses its business on retail partnerships.
The relationship with XRC Labs Pano Anthos started after a small pilot integration between Joymode and Walmart that started in late 2019. “[It] It became clear that we should engage in retail partnerships, ”said Fernandez. And when the company was looking for partners to pursue the strategy, Anthos and his company XRC were mentioned repeatedly, said Fernandez.
The exact terms of the contract with XRC Labs have not been released, but Joymode will become a wholly owned company of XRC and, according to Fernandez, may be able to return to the market to raise additional funds from additional investors.
“We could never break the growth we needed,”
Although Joymode was not a success, Fernandez said he could not blame his investors or his team. “We have to go through every possible idea we had. In the truest sense of the word, every idea we had was exhausted … We failed and that’s a shit, but we got a fair shot, “he said.
What is left of the company is an inventory management system in the backend and a service that enables every retailer to engage in the rental business in the future.
“Part of the thesis was that people want to do more by providing rental properties,” said Fernandez. What happened, however, was that consumers needed additional reasons to use the company’s service, and there weren’t enough events to drive demand.
“I believe that the inventory management system we have developed has been incredible and will be a standard for retailers who will be renting out in the future,” he said.
When the company turned to retailers, the rental option became a way to generate revenue from additional products. “All the accessories that made the event even better,” said Fernandez. “Add-ons, try it before you buy, experience things that are much more complete in a retail environment.”
The problem with Joymode was that the company had the inventory, which led to high fixed costs. “We never felt safe about growing in LA to justify the cost of opening in another city,” said Fernandez. “If we had cracked the user acquisition in LA, we would have introduced it in several places. “
Ultimately, Joymode members saved $ 50 million by using Joymode to rent products instead of buying them. The company purchased a total of 2,000 unique products – from beach and camping equipment to video games, virtual reality headsets and cooking appliances. Around 30,000 products would be delivered from the company’s warehouse to locations throughout Southern California on a particular weekend.
At XRC Labs, a company founded in 2015 to support the consumer goods and brand space, Joymode will add an accelerator that raises between $ 6 and $ 9 million every two years and manages a growth fund that manages $ 50 million in assets Could reach US dollars.
For Anthos, the best consequence of Joymode’s business could be the rental business at Home Depot. “Home Depot’s rental business is over $ 1 billion a year,” said Anthos. “There will be this huge component of our society, and for them renting will not only be a more sustainable, but also a more sensible option. They’ll want to rent because they don’t want to own it. “
Joymode was supported by TenOneTen, Wonder, Struck Ventures, Homebrew and Naspers (now Prosus).