A Newly-Profitable Rent the Runway Raises Another $60 Million
While most of us were busy complaining about 2016 losses, Rent the Runway (RTR) has been busy celebrating win after win.
On Tuesday, the clothing rental company announced a $60 million funding round after announcing a new partnership, a new flagship store, and a new revenue stream—all in the same year, according to Recode.
“We are coming off of our most successful year since the company’s inception,” the company’s co-founder and CEO Jennifer Hyman said in a statement. The success she is referring to might also allude to the fact that RTR is now profitable on an EBITDA basis and has grown revenues to over $100 million this year, Recode reports.
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The series E round was led by Fidelity, with participation from existing investors Technology Crossover Ventures, Bain Capital Ventures, Highland Capital Partners, and Advance Publications.
Hyman told Recode that the associated valuation is a “significant step up” from the $520 million one that RTR earned when it raised $60 million in 2014. “I didn’t really see a purpose to having an outsized valuation right now that was way ahead of our growth and potentially make it harder for us to have optionality over the next few years,” Hyman said.
According to a statement issued by the company, RTR plans to invest the new influx of capital into four areas: 1) the company’s original a la carte rental product, through which customers can clothing piecemeal; 2) its Unlimited subscription business, which gives women access to a rotating selection of designer clothes for a fixed monthly price; 3) brick-and-mortar store locations, which already exist in six cities; and 4) its operations and logistics platform.
And back in March, the company launched Unlimited, a new subscription service that allows members to rent clothing for everyday wear. “With Unlimited, we are putting the closet in the cloud and allowing women to experience and cycle through thousands of designer looks for their everyday work and weekend wear,” Hyman said at the time.
Recode reports that revenue from Unlimited accounted for more than one-fifth of total company revenue in its first year.
Around this time last year, Hyman said that she believes her company can grow to be even bigger than Netflix (NFLX), the movie rental company to which many drew comparisons when RTR first launched (some still continue to do so). “Given that Netflix is a $60 billion company—and we don’t have to watch TV or movies every day, but we do all have to get dressed—the potential for Rent the Runway was 10 times bigger than I ever thought,” she told Fortune.
Rent the Runway did not respond to Fortune‘s request for comment.