Rent the Runway closed on its third round of financing, raising $24.4 million.
The round was led by Advance Publications Inc., the parent company of Condé Nast and Fairchild Fashion Media, parent of WWD, and includes American Express and Novel TMT Ventures. Previous investors — Bain Capital Ventures, Highland Capital Partners and Kleiner Perkins Caufield & Byers — also participated in the latest round. Following the closing of the latest round, Rent the Runway thus far has raised an aggregate of $55.4 million.
According to Jennifer Hyman, cofounder and chief executive officer, “The business is continuing to expand very quickly. We are investing in people, marketing and scaling our operation to make sure we are delivering incredible customer experiences. Over the next year, we have plans to expand our showrooms.”
The showrooms are physical retail spaces where customers can try on dresses and accessories as well as book appointments with Rent the Runway’s stylists to discuss fit and style needs. It has one so far, at its New York City headquarters in the West Village. RELATED STORY: Rent the Runway's 'New Economy' >>
Hyman said at some point the company will need to decide whether to move out of its New Jersey warehouse and build a larger facility or have multiple distribution centers. A top priority is hiring engineers to improve operations and logistics.
It was a company engineer who had the idea for the firm’s social shopping platform launched in October that enables renters to see outfits on other women with similar height and weight measurements, Hyman said.
As for investments in logistics and technology, Scott Friend, managing director at Bain Capital, said the company has needed continued investment to grow because it is “more expensive than other start-ups. Really good systems and processes help to make the [business operations] less expensive. Rent the Runway builds its core operating systems in-house” rather than buying software off the shelf. Friend explained that expense is required because of the need to tailor the programs to the complexities of the business.
“In [this] business, 100 percent of what we send out comes back four days later on purpose. We have to make it look brand new all over again so we can ship it out again on Thursday, knowing it comes back on Monday. That involves seamstresses and dry cleaning….We’ve learned that certain materials wear and tear better than others. Certain lengths of dresses wear and tear better, helping the inventory last longer….This management team hired a guy who ran a dry cleaning chain to run their warehouse facility. He implemented processes and systems. All this takes a lot of capital to build the business the right way [in order to] scale the business,” Friend said.
Hyman said at some point an initial public offering is likely, but there’s still more to do to build the brand and platform so it continues to be a “huge marketing engine” for designer brands and retailers.
According to Hyman, the firm is really an “experiential marketing engine” for brand vendors and retailers because it allows consumers to learn about designers they’ve never heard about before.
Although customers have asked about buying the dresses they rent, so far there are no plans to allow that, requiring them instead to reach out directly to the brand or a retailer for that purchase.
The company plans to expand to new categories this year, although she declined to provide details. The firm currently rents designer dresses, jewelry and handbags.
Hyman is betting on feedback from Condé Nast, American Express and Novel TMT — each with its own expertise in three different industries — to help her firm improve on its business model and grow the operation.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)