Rent the Runway, American women’s clothing rental, gets $20M from Jack Ma and Joseph Tsai
Rent the Runway, American women’s clothing and accessories rental platform has received $20 million from Blue Pool Capital, the financial firm that invests the wealth of Alibaba founders Jack Ma and Joseph Tsai.
Founded in 2009, Rent the Runway is headquartered in New York. It was started by Jennifer Hyman and Jennifer Fleiss. The duo met at Harvard Business School and decided to start the company together.
The venture allows women to rent heavily-priced designer dresses at nominal rates. Though it started as an e-commerce company, it later also moved offline and opened brick-and-mortar retail stores in Los Angeles, San Francisco, Chicago, New York, and Washington D.C. Two years ago, the company started a subscription model for women to rent a rotating closet for everyday wear.
As Recode reported, all this, plus a profitable year on an EBITDA basis while growing its revenue to over $100 million, helped the startup closed $60 million equity investment led by Fidelity, a mutual fund company, with existing investors Bain Capital Ventures and TCV putting in additional money.
With the new investment from Blue Pool Capital, Runway is valued at a little less than $800 million, as reported by Recode. In an interview to the publication, Jennifer stated, “I have huge respect for Joe and Jack and wanted to opportunistically involve them in the business as we embark on our biggest growth stage. Given the global aspirations that we have – especially in Asia – I thought they would be very good people to have around the table.”
The global aspirations of Rent the Runway may get wings with this new infusion of money. How things pan out for them globally is something that needs to be seen, given that most countries already have clothes and accessories rentals for women and men both.
In India, we have seen startups like Delhi-based RENT IT BAE, which offers major brands and designer labels on rent at 10-15 percent of retail prices. New Delhi-based Stage3 also offers designer clothes and accessories for men and women both, along with free home trials and personalised styling assistance. Flyrobe caters to both men and women and supplies western wear on-demand with a three-hour delivery timeline and ethnic wear on advance booking. With more and more millennials preferring to rent rather than buy clothing and accessories, this is quickly becoming a lucrative market. Will Rent A Runway manage to make a global dent in the face of local competition? This remains to be seen, and it is perhaps a bit early in the day to speculate.