Venture capitalists are pouring more money into marketplaces for used clothes. Just a week after Poshmark, a mobile clothing marketplace raised $25 million, rival TheRealReal is also announcing a new $40 million cash infusion.
TheRealReal, which focuses on luxury clothing, jewelry, and art, has raised a new funding round led by Greenspring Associates, with new investors Broadway Angels, Next Equity, and Springboard Fund participating. Existing investors Canaan Partners, e.ventures, Greycroft Partners, InterWest Partners, DBL Partners, and Industry Ventures also backed the company, bringing TheRealReal’s total funding to $123 million. The company declined to disclose its valuation.
Unlike Poshmark and eBay, The RealReal actually takes possession of clothes, bags and jewelry from sellers in order to authenticate it, and will even pick up inventory from seller’s homes for a fee. For its services, The RealReal takes a 40% cut. (Once a seller hits $10,000 in sales, the cut drops to 30%.)
Since its founding in 2011, TheRealReal has signed up 4.5 million users and sold over 2 million items. The company’s founder and CEO, Julie Wainwright, told Fortune that the site sold $200 million worth of goods in 2015, which is double the amount in 2014. She said that TheRealReal is on track to exceed $1 billion in annual revenue in the next three years. The company is not yet profitable.
For more about startups, watch:
As for the funding, Wainwright said that the company was in a good financial position following its previous investment round in 2015. But she said that the company decided to raise more money to give it “strategic flexibility” for an expansion and for acquisitions.
Some of the new funding will be used to expand the company’s recent jewelry “valuation” centers in New York and Los Angeles where potential sellers can bring their rings and watches to get estimates about what they’re worth free of charge.
Although Wainwright said TheRealReal isn’t hurting for money, many online consignment sites are facing consolidation because of competition from larger sites and established companies like eBay (EBAY). Twice, a venture-backed clothing reseller, sold to eBay in a fire sale last year. Tradesy bought rival e-commerce site Shop-Hers. Threadflip closed its doors earlier this year.
“Consolidation is a good thing, and I expect it to continue to happen,” said Wainwright. “The strong ones will get stronger.”
