Circular, backed by Y Combinator, is a service that offers consumers in Singapore and Australia subscriptions to high-end electronics, like iPhones, Samsung Galaxy, iPad Pros and MacBook Pros. Not only does it want help people get devices at lower prices, but also keep them in circulation for as long as possible and out of the landfill.
The company announced today it has closed a seed round of $7.6 million, bringing their total valuation to $30 million. The funding was led by AirTree Ventures, with participation from YC Continuity Fund, Global Founders Capital, Partech Ventures and January Capital. The round also included angel investors like the founders of PropertyGuru, Funding Societies, Stashaway, Carousell and Nutmeg.
Circular’s team notes that the tech subscription model is popular in Europe, where one company, Grover, raised $330 million in 2022. But the model is still new in APAC and Circular hopes to lean into its position as a first mover in the region. The startup says it has grown 3X in the last 12 months and plans to grow 3X more in Singapore and Australia over the next year. There’s at least one other tech subscription service in Singapore called ITEZ.SG, but it focuses on serving businesses instead of consumers.
CEO and co-founder Nick Ramsay says sustainability is one of Circular’s key tenets (the startup’s other founders are George Oliver, Pantha Roy and Yaniv Bernstein). He notes that many consumers constantly upgrade their devices, and consign their old phones to the back of drawers or cupboards even though they can still be used. “All this has a significant environmental impact as far as resource consumption and electronic waste is concerned,” he said.
Circular claims its business model minimizes waste because it uses each device until the end of its lifecycle. It offers refurbished devices, in addition to new ones, and works with what it describes as industry-leading specialists in refurbishment.
Founded in Singapore in 2021, Circular’s subscription services include free damage protection up to 90% of the cost of repair. Some examples of products it has on its site now include an Apple iPhone 15 Plus starting from SGD $74 a month, an Apple iPad Pro M2 12.9” for SGD $64 a month and a Lenovo ThinkPad T14 (Gen 3) 14-inch laptop for SGD $94 a month. In the case of the iPhone 15 Pro Max 256GB, Circular says subscribers can save up to SGD $955 compared to purchasing the phone directly from Apple. Circular also recently began adding gaming products to its Singapore catalog, supplementing its core categories of phones, tablets and laptops.
Ramsay said he is a “strong advocate for transitioning toward the circular economy, and believes many people are beginning to question the trade-off between access and ownership when it comes to tech products” as they became more aware of issues like climate change and wasted resources like underutilized tech products.
Before starting Circular, Ramsay was chief product and technology officer at MoneySmart Group, one of Southeast Asia’s largest financial product aggregators. During that time, he says he realized that existing financial products for consumers and SMEs “only serve to reinforce the linear economy and legacy concepts of ownership.”
Circular co-founder and CEO Nick Ramsay. Image Credits: Circular
The low cost of Circular’s monthly subscriptions means that consumers no longer need to use credit cards, BNPL services or sign long-term contracts with telcos, Ramsay added.
When asked why subscription tech hasn’t taken off in Asia the way it has in other markets, Ramsay said, “It is clear that we are right at the start of a new consumption paradigm driven by the subscription and the circular economy.” He added, “it was a similar story when the subscription model started disrupting digital products — but we all eventually shifted away from buying CDs and downloading MP3s to streaming music on Spotify, and from buying and renting DVDs to watching shows and movies on Netflix.”
One challenge Circular is facing in Asia is that “there is a strong preference for ownership of physical goods as it carries a sense of status and accomplishment. Disrupting the traditional learned behavior of device ownership with a subscription is a big change for a culture that tends to be risk-averse and wary of change.”
Ramsay’s solution to that is “mythbusting.” “What we usually hear is that Singaporeans would rather purchase their tech device upfront to recoup some of the money back when they upgrade to their new device in a year. But more often than not, people never recoup that initial cost — especially if people don’t factor in unexpected expenditure from accidental damage and the device ends up at the back of a drawer and eventually thrown away.” He added that people tend to underestimate the cost of depreciation for mobile phones and other electronic devices, as well as the inconvenience of selling a secondhand phone.
But one factor in Circular’s favor is that the Singaporean government has made it a priority to reduce e-waste, which Ramsay says “will play a massive and critical role in accelerating adoption of the circular economy.”
For customers willing to try Circular’s subscription model, the company offers customizable plans. For example, some people may only need a device for a few months, while others want one for years. Ramsay says that on average, Circular sees twice as many long-term subscriptions as short-term ones. Customers currently have a choice of subscription plans: three-month, six-month, 12-month, 18-month and 24-month, varying by product type. The shorter subscription periods are suited for short-term work or school projects, while the 12-month option is geared toward people who want the latest smartphone.
Circular also offers a purchase option for people who really don’t want to give up their devices. The company will offset half of their subscription payments paid against the retail price of the device. “That said, it’s an option our customers very rarely take and it’s one that we do not encourage people to take. In fact, once people subscribe with us, we often see them quickly coming back for second or even third devices once they see how affordable and convenient subscriptions are,” said Ramsay.
When asked why customers would choose Circular over the monthly payment plans offered by Apple and other electronic sellers, especially those that charge no interest, Ramsay said Circular’s subscription model spreads the cost of the device over multiple customers and multiple subscriptions, which makes it cheaper than retailers’ payment plans.
Once a customer is done with a device, it is sent back to Circular for refurbishment, where it gets all data wiped, goes through testing for software and hardware functionality and is sanitized.
Ramsay says that as inflation and cost-of-living concerns continue to affect customers, many are using Circular to subscribe to older models like the iPhone X and iPhone 11 at a much lower price point.
“In the broader market, secondhand device sales are growing faster than new devices, and every month we see more demand for refurbished and previous-generation devices that we organically have available from our own supply of end-of-cycle devices,” Ramsay said. “To that end, we work constantly with our partners to source older models in great condition to add to our pool of devices.”
Circular’s goal is get about six subscription cycles each device. Once it can no longer be rented out, it is recycled so that the materials used in the device can be brought back into circulation.
The company plans to use its new funding to expand its product-market fit in Singapore and double down on its expansion in Australia, where Ramsay said there is increased demand for used devices, and strong demand for sustainable business models, based on its research. It also plans to focus on its B2B offering, Circular for Business, which serves startup and SMEs.
In an investor statement, AirTree founder and partner Craig Blair said, “Circular is at the heart of the perennial and emerging consumer trends, such as the shift towards sustainability, changing ownership preferences and the desire to have the latest tech. On top of that, Circular’s founding team has an incredibly strong and complementary skill set across company building, product, engineering, marketing and logistics that makes us excited to lead their seed round and see where they take the future of the circular economy.”