1. Business
January 11, 2022

Green = greenbacks: “Bank of Things” Twig closes $35m Series A round

By Eric Johansson

London-based Twig is the latest startup to benefit from investors’ growing appetite for sustainability-focused business ideas.

Founded in 2020, Twig has just closed a $35m Series A round led by Fasanara Capital. This is not the first green initiative backed by the alternative asset management company: Fasanara Capital launched an environmental, social and governance (ESG) focused financing programme in October 2021, worth $60m.

Twig’s round was also backed by a number of unnamed angel investors. The startup claims these backers include current and former executives from LVMH, Valentino, Balmain, Tod’s, Swarovski, L’Oréal, Barclays, Goldman Sachs and Scalapay. The venture did not disclose its valuation.

Twig’s business is actually buying up its users’ old stuff at prices set by itself – using its own algorithm based on data from “the top 50 marketplaces globally” – and selling the items on for a profit, as a high street junk shop or vintage clothes stall at the market might.

However, Twig much prefers to see itself not as a merchant but as a fintech. And of course re-using things is perhaps even more sustainable than recycling them, so the sustainability angle is real. It also offers a debit card for payments.

“Our mission is to empower our consumers to make conscious choices around sustainability, and simultaneously release wealth in an instant and seamless way, fit for 2022 digitally savvy users,” Geri Cupi, founder and CEO of Twig, says.

Adding that the company has “spent considerable time understanding both consumer patterns and lifestyle needs of Gen Z and core millennial audiences” Cupi believes Twig is “uniquely” placed to “cater to their needs and to a wider audience” in the UK and – following the funding round – soon in Europe and the US too.

The self-styled “Bank of Things” claims that “57% of Gen Z consider resale value before buying new items and 32% buy new items funded by selling old ones.”

Citing a study from the Ellen MacArthur Foundation, which the fintech is a member of, Twig suggests that circular business models could be worth $700bn by 2030, making up 23% of the global fashion market. Unsurprisingly, Twig uses these assumptions to argue the need for its offering.

So what is Twig’s special fintech sauce? The company has developed a pricing algorithm that can calculate the resale value of items in different markets, focusing primarily on fashion and electronics, in real-time.

Next, Twig presents users with two options: they can either sell their stuff on a secondary marketplace, a process the startup says could take between three to six months, or sell the items via Twig. If customers opt for the second alternative, they can then cash out immediately.

Since launching in in July 2021, Twig claims to have grown at a rate of over 100,000 monthly downloads.

Twig did not respond to Verdict’s requests for additional clarifying comments before the publication of this story.

How Twig is an example of a bigger sustainability trend

By reselling second-hand stuff, Twig can arguably state that it is a sustainability-focused startup as it reduces the demand to buy new stuff, which would’ve had a bigger impact than recycling old goods.

Twig is only the latest startup to access capital from investors by leaning into its green chops. Verdict has previously reported on other examples, including Doconomy and Climatiq, both designed to make online shopping more sustainable.

But investors’ appetite to inject cash into sustainability-focused startups is bigger than online shopping. A recent thematic research report from GlobalData suggests that this might just be the beginning of a new green investment wave.

“Given the push by governments, regulators, investors and stakeholders towards sustainability, startups are in a rush to build capabilities around advanced sustain-tech solutions ranging from electric mobility, energy storage, biodiversity, renewable energy, emissions monitoring and reduction to circular economy,” analysts write in the report.

Data suggest that investments into this theme grew every year between 2016 and 2021, with GlobalData recording 730 deals worth just under $40bn by October last year. The research also notes that most of those investments are happening in the early stage of startups’ journeys, suggesting that there is still room for the sector to mature.

The research also notes that sustainability is increasingly being mentioned in corporate filings, suggesting that the focus on limiting their environmental impact is only set to grow. In other words, Twig won’t be the last sustainability-focused tech startup to raise money.