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NEW YORK — Rent the Runway, the online site for dress and accessories rentals, has raised $20 million in its third round of financing.
The latest round was led by Advance Publications Inc., the parent company of Condé Nast and Fairchild Fashion Media, parent of WWD. Other investors include Bain Capital Ventures, Highland Capital Partners and Kleiner Perkins Caufield & Byers, each of whom has made prior investments in the company. Prior to the latest round of financing, the online rental destination site raised more than $31 million in venture capital funding.
The latest round comes at a time when there’s been some pullback on venture capital investing, particularly in the e-commerce space since it is sometimes considered an older established model when compared with the sexier application developments that are getting attention to capture mobile activity on smartphones and tablets.
Scott Friend, managing director at Bain Capital Ventures, the venture capital arm of Bain Capital, said, “When you look across a lot of the potential investments out there, Rent the Runway is the exception. It has a unique value proposition. Some that are good for consumers are not good for vendors and some that are good for vendors are not good for consumers. Rent the Runway markets to aspirational consumers who would not otherwise learn about some of the new brands [available at Rent the Runway].”
Robert Sauerberg, president of Condé Nast, said, “Our investment in Rent the Runway underscores our commitment to working with innovative, adaptive companies that serve the growing needs and desires of consumers. We are particularly focused on companies run by smart people with carefully managed businesses and talented teams.”
Jennifer Hyman, chief executive officer and cofounder of Rent the Runway, said the site, which has three million members between the ages of 15 to 35, rents for special occasions and often “discovers” brands that they’ve never heard of while on the site. Many try the brand, like it and then become shoppers of that brand, Hyman added. That’s the value proposition for its vendor partners.
Sauerberg is joining the Rent the Runway’s board, and Hyman said at some point they will “brainstorm a marketing program” that will allow the site access to Condé Nast readers and vice versa.
When the company did its $15 million venture capital round with Kleiner Perkins in May 2011, there were just 140 designer brands available on the site. Now that number is more than 200.
The vertically integrated operations for the firm, which launched in 2009, are in Secaucus, N.J., where the dry cleaning, tailoring, jewelry repair and pick, pack and ship is done.