Rent the Runway is a designer fashion startup that allows women to rent designer clothes at affordable prices. It lets women look good without having to shell out a lot of money on designer outfits.
The company announced that it has raised $60 million that will bring the total value of the start-up from $500 to $600 million. The new round will bring the amount that the startup has raised to $116 million.
But investors are skeptical about Rent the Runway’s new subscription-based business model. By subscribing to the service, women will have a stream of designer clothes mailed straight to their homes for just $50 per month. Items include clothes from Badgley Mischka and Balenciaga. New items will be sent to the subscriber as soon as old items are sent back. Customers can also rent specific items. A gown that is worth more than $1,000 can be rented for a portion of its retail price.
Jennifer Hyman, co-founder of Rent the Runway, said that they opened up high fashion to millions of women who can’t afford to wear the items before. The company has been around since 2009 and they managed to convince women that they can shop for high end fashion items online at a fraction of the cost. The high-end mail order clothing business is hard because customers can’t find the exact look they are looking for.
Hyman said that they didn’t have any difficulties in asking women to shop for top designers through their website. While she doesn’t want to disclose their revenue, she said that Rent the Runway has delivered more volume in 2014 than the first four years combines. She added that new customers and orders have increased by around 120 percent from last year’s number.
Most of the executive leadership of Rent the runway is made of women. This is a rarity with online startup companies. The company’s president, Beth Kaplan, was the head of General Nutrition Centers before it had its IPO. Camille Fournier, company’s chief technology officer, helped in expanding the company’s engineering team from eight to 60 workers.