Retail

Rent The Runway In $60M Series E, Plans Growth

Luxury apparel rental business Rent The Runway announced recently that it has closed a new $60 million equity investment Series E led by Fidelity Investments. The Series E was rounded out with additional contributions from existing investors, including Bain Capital Ventures and Technology Crossover Ventures.

The allure of Rent The Runway is that users can rent a piece of clothing, which might cost $500 at a retail store, for a fraction of the price. Items for rent feature a listed retail price alongside the cost of renting on the Rent The Runway platform. The renter saves money by not having to purchase the item, and Rent the Runway is able to create revenue from the garment on an ongoing basis as it is shipped back and re-rented time and again.

Jennifer Hyman, cofounder and CEO of Rent The Runway, was quoted as saying, “Given a tougher market over the past year or so, I wanted to put the company into a sustainable financial situation where we were not beholden to external swings in the economy. We achieved that and saw that the market rewarded the strong financial foundation we had built.”

In addition, Hyman said the latest round of funding will help Rent the Runway grow its 1,000-person business, though she doesn’t expect marketing spending to rise much higher than the current 4 percent of revenue.

Rent the Runway reportedly grew its revenue to well over $100 million in the past year, largely thanks to launching its Unlimited program in March. For $139 per month, shoppers can rent three articles of clothing — or three every month for $1,700 per year. Hyman previously hinted at different pricing tiers in the future once the program takes off.

In November of this year, Rent the Runway began opening up physical locations, starting in San Francisco’s downtown Neiman Marcus, which now hosts a rotating selection of clothing items and accessories from more than 400 designers, including Diane von Furstenberg, Derek Lam, Jason Wu and Marni.

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