Luxury consignment Web site The RealReal has landed its largest round of funding to date — $40 million — to accelerate growth toward profitability.
This story first appeared in the April 9, 2015 issue of WWD. Subscribe Today.
The Series D funding was led by Industry Ventures with other new investors E.ventures Growth, Greycroft Growth and DBL Partners. Existing investors Canaan Partners and InterWest Partners are also participating in this round, bringing the company’s total funding to $83 million.
The RealReal, which posted revenue of $100 million in 2014, declined to project a date when the business will move into the black, saying only that “the funding will help us get to near-term profitability.”
The cash infusion will allow the site to continue its growth while also making investments in long-term scalability.
“This new round of funding will be instrumental in allowing us to double our revenue [this year] while driving toward profitability, both of which are top priorities for the company in 2015,” said Julie Wainwright, founder and chief executive officer of The RealReal. “In addition, we’re laser-focused on scaling the business operationally and continuing to provide our members with the best authenticated luxury shopping and consigning experience anywhere.”
The RealReal, which launched in 2011, takes possession of merchandise and authenticates items up-front, inspecting and guaranteeing that they are genuine. Consignors receive between 60 and 70 percent of the sale price. The company offers a white glove service where luxury managers visit an individual’s home to advise them on the consignment process and pick up their items. The service is available in 18 major U.S. cities.
The RealReal employs specialists in fine jewelry, watches and art and a large team verifies the provenance of apparel, shoes, handbags and accessories. Top sellers on the site include ready-to-wear and handbags from Chanel, Hermès and Louis Vuitton; jewelry and watches from Cartier, Rolex, and Van Cleef & Arpels, and art by Andy Warhol, Roy Lichtenstein and Sam Francis, among others. According to the company, most items sell for 90 percent off retail prices. Examples of The RealReal’s rarefied products include a two-tone black and orange crocodile Hermès Birkin handbag for $55,000. A crocodile Birkin 30 handbag for $25,000 notes that a comparable bag was listed at auction for $70,000. Van Cleef & Arpels hand-hammered gold cuffs are $59,000; the Web site notes that a similar pair were seen on Jacqueline Kennedy Onassis.
With 3.5 million members, The RealReal has sold 1 million items since 2011. The Web site, which is becoming a cash generator for its consignors, is expected to pay consignors more than $100 million from the resale of their luxury products. Wainwright believes traditional retailers and designers are the beneficiaries of consignors’ earnings as they are using the money to buy new luxury goods. “Over the last four years we’ve established ourselves not only as the trusted reseller of luxury goods online, but also as a contributor to the luxury life cycle,” Wainwright said. “In surveying our consignor-base, we’ve found an interesting trend — many are using the money they make consigning with us to purchase new luxury items from retailers like Neiman Marcus, Saks Fifth Avenue and Barneys New York. This year alone, we’ll return over $100 million to consignors, much of which will be put back into the luxury retail market.”
The RealReal’s fastest-growing categories is its fine jewelry and watch category, which leaped 251 percent year-over-year from 2013 to 2014, and is expecting a 250 percent increase in 2015. Men’s fashion jumped 225 percent year-over-year from 2013 to 2014. The category is expecting growth of 125 percent in 2015.
“We’re proud to be leading this new round of funding for The RealReal to help support their focus on driving to profitability in an important market segment,” said Victor Hwang of Industry Ventures. “We initially invested in The RealReal through a secondary transaction, and as a Limited Partner in Canaan Partners and InterWest Partners, we have followed the company and been immensely impressed by their phenomenal growth and operationally sound business. We’re excited to watch them take the next step and further solidify their position as the leader in the luxury consignment space.