To speed its growth, the company secured a $200 million credit facility from Temasek. As part of the deal, the Singapore-based investment firm received warrants and an “observer seat” on the company’s board.
The financing will be used to drive subscription growth, expand its proprietary “reverse logistics” operations and refinance existing debt. The subscription business gives users access to four looks from 450-plus brands at a time for $159 a month and is up 150 percent on a year-over-year basis.
“As the consumer landscape has changed dramatically, we have normalized the behavior of clothing rental, and access to these funds enables us to accelerate our vision of putting the closet in the cloud for every woman,” said Jennifer Hyman, Rent the Runway’s cofounder and chief executive officer.
Chief financial officer Scarlett O’Sullivan added: “The ability to draw from this facility gives us flexibility to accelerate our growth plans for our subscription business over the next few years. Working with an equity-minded, long-term strategic partner like Temasek allows us to leverage their unique understanding of our business model and proven track record of supporting high-growth companies.”
Rent the Runway got its start renting special occasion looks and while the notion was initially met with skepticism, designers opened up as the service became an important buyer and also exposed brands to new customers.
The firm’s success and the prominence of similar business in other areas, such as Uber and Airbnb, helped pave the way for an increasing number of other fashion companies offering a new spin on rentals, including The Black Tux, Gwynnie Bee, Mr. & Ms. Collection, Switch, Style Lend and more.
Rent the Runway is nine years old, but Hyman told WWD in May that the rental business is still at “the very, very beginning.”
“I’m saying that as a person who already has a company with nine million customers, that’s built it from an idea to a billion-dollar business,” the ceo said. “We’ve normalized the behavior of rental across the country.”