Raylo, a start-up in the mobile sector, has raised £1.6 million to release a new way to get the latest iPhones without being tied to a contract.

The company claims to offer payments up to £803 cheaper over 24 months against the largest networks in the UK by customers returning the phone after the period when they’re ready for newer technology.

Raylo’s subscription also includes full insurance so its customers are covered against loss, theft, and accidental damage.

The firm has designed a process for repairs and replacements so customers can have it repaired.

Raylo is running a waiting list for the launch of the next iPhone in September, including a referral programme allowing customers to boost their position by referring friends.

The company’s three founders have a background in financial services and met at nimble FinTechs where they saw first-hand how technology and a fresh approach could disrupt traditional industries.

Raylo has raised the funds in pre-seed funding and is backed by Techstart Ventures, a seed stage focused VC, and a select group of angel investors including Samir Desai and James Meekings, the co-founders of Funding Circle.

“The mobile networks have not evolved and customers continue to face an outdated product offering, poor experience and endless high-street stores,” said Karl Gilbert, CEO and co-founder.

“We believe that mobile can be better in every single way and we’re starting by solving the most important part – a smarter new way to get the best iPhones, at a low monthly price, SIM-free and fully insured.

“The networks should be treated like utilities and we believe that everyone should be SIM-only – it’s cheaper and more flexible.”

The company will find new homes for all of the phones returned by its customers when they upgrade to a new phone, diminishing the levels of wastage caused by people discarding old devices.

Richard Fulton, co-founder and chief strategy officer, added: “Every year millions of phones end up in drawers or even landfill – it’s bad for the environment and a waste of money.

“Sustainability is very important to Raylo, we have the benefit of starting from scratch and believe we have a responsibility to do things better than the incumbent networks – for the planet, and our customers’ pockets.

“Our packaging is fully recyclable, and our phone cases are made from plants not plastic through our partnership with Pela, the leading compostable phone case producer.”