Rent the Runway has secured a $200-million term loan from Singapore's government investment firm Temasek, according to various news reports. A spokesperson for Temasek noted in an email to Retail Dive that the loan represented "investment into debt and not the extension of a credit line." Rent the Runway did not immediately returned Retail Dive's requests for comment.
Terms allow the fashion rental startup to access funds as needed. The money will go toward expanding its logistics operations to speed up orders and returns, and to widen its fashion assortment, Rent the Runway Chief Financial Officer Scarlett O'Sullivan told Recode.
Some of the funding will also go to refinance older debt with more favorable terms, according to Recode.
As Rent the Runway has evolved, it's tested the limits of its own revolutionary premise: that people will inevitably think of their wardrobes as existing "in the cloud," making it virtually infinite.
The startup has gone well beyond its original concept of renting special occasion dresses and shoes — the Cinderella approach — to renting casual wear and office wear on a routine basis. Last fall the company tweaked its membership program, including adding a less expensive tier.
Investors have been keen on the concept and on Rent the Runway's expansion of its stores and services. Earlier this year the company announced a $21 million investment from an affiliate of Blue Pool Capital, an asset management firm established by Alibaba founders Jack Ma and Joe Tsai. In December 2016, the company 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.
This time around, the money comes in the form of credit, however, in order to maintain flexibility and avoid diluting the stakes of the startup's existing investors, according to Recode's report. "To be blunt, equity was not a consideration," O'Sullivan told Recode.