TomorrowVentures, Google chair Eric Schmidt’s VC firm, has just led a $1 million round of funding for YBUY, a Los Angeles area startup that offers a subscription gadget service, allowing tech fiends to try before they buy.
From iPads to espresso machines, YBUY delivers top-shelf gizmos to its customers for $25 each month. The customers get to use the gadget for any and all of its intended purposes for 30 days; they than mail it back. Shipping is free both ways.
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Subscription commerce in general is super hot in Startuplandia right now — particularly in the business-minded mecca that is Los Angeles. Startups like Wittlebee (subscription mom commerce), Dollar Shave Club (subscription razors), and MeUndies (yes, even subscription underpants) are defining that startup ecosystem lately.
YBUY is similar to all these, the main difference being that you have to return the products when the month is up — which makes sense. We love technology and all, but a $25 iPad is a bit far-fetched. Customers can choose to keep the gadgets, but then they have to pay for them. When that happens, YBUY deducts that month’s subscription fee from an already somewhat discounted price for the product in question, then the customer pays the remainder.
This funding marks the startup’s first institutional round. TomorrowVentures was joined by David Hanna, CEO of CompuCredit Corporation, and Jim Patterson, chief product officer at Yammer, which was recently acquired by Microsoft.
“YBUY has a strong product market fit,” said YBUY CEO Stephen Svajian in a release this morning.
“It’s clear that people love finding out about cool new products, and they’ve shown they need to try those products before they commit to them financially. From the start, our developmental strategy has been, ‘nail it, then scale it.’ We’ve nailed it. Now, these additional funds will help us test assumptions around scaling the business.”
YBUY was founded less than a year ago in August 2011 and launched earlier this year.
Image courtesy of David Hammonds, Shutterstock