Rent the Runway raises $60M to expand store footprint, subscription business
- Upscale apparel rental company Rent the Runway closed a $60 million Series E funding round led by Fidelity Management and Research Company, with existing investors Technology Crossover Ventures, Bain Capital Ventures, Highland Capital Partners and Advance Publications also participating.
- Rent the Runway, which enables customers to rent designer apparel and accessories from labels including Nicole Miller, Badgely Mischka and Cynthia Rowley, touts more than 6 million members across the U.S.
- The New York City-based startup, co-founded in 2009 by Harvard Business School graduates Jennifer Hyman and Jennifer Fleiss, has now raised more than $190 million in venture financing.
Rent the Runway is entering 2017 with a full head of steam. In recent weeks the haute couture brand inked a deal to open a 3,000-square-foot boutique in struggling department store chain Neiman Marcus’ San Francisco store, and earlier this month, Rent the Runway also unveiled its largest brick-and-mortar location to date, a 5,000-square-foot space at 30 W. 15th Street in Manhattan that will replace its current Flatiron District flagship.
Rent the Runway first moved into physical retail in October 2013, opening a space on the second floor of New York's Henri Bendel, and launched its first standalone store 11 months later. In announcing the completion of its Series E funding round, Rent the Runway said it will leverage the additional capital to further flesh out its brick-and-mortar presence: Destinations like the Manhattan store not only afford customers an opportunity to see, feel and try on dresses and other high-end items, but also offer a sense of place, Rent the Runway President Maureen Sullivan told CNBC last month. "It's more like a club, or a place that you feel like you're kind of a member of," Sullivan said.
Rent the Runway offers close to 65,000 items through its website and mobile application. The firm loaned its customers an estimated $1.35 billion worth of high-end items in 2015, and expects to eclipse $100 million in revenues by the end of 2016. Its success is due in large part to its strong millennial following: Beyond access to apparel otherwise outside the financial limitations of many younger shoppers, Rent the Runway’s business model also complements consumers’ growing environmental concerns, breathing new life into merchandise customers would otherwise likely wear only once, at weddings and other milestone social events. A study from Nielsen last year showed that 66% consumers are willing to pay more for a product if it came from a company that's committed to making a positive environmental impact, up from 50% in 2013.
Rent the Runway said the latest $60 million infusion also will accelerate growth of its a la carte and subscription rental services, as well as the continued development of its reverse logistics platform: The company processes all orders through its 150,000-square-foot fulfillment center, where each item is inspected by experts, dry cleaned in an industrial-size machine and steam-pressed.
- Rent the Runway Press Release Rent the Runway Raises $60 Million in Series E Funding Led by Fidelity Investments
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