Warby Parker gets a $3 billion valuation
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Eyeglass-selling startup Warby Parker has raised $245 million with investments from D1 Capital, Durable Capital Partners, T. Rowe Price, and Baillie Gifford.
A source familiar with the financing tells Fortune that the new funding values the company at about $3 billion, a sizable uptick compared to $1.75 billion following its valuation at its last announced funding in 2018.
The unicorn, which sells glasses both online and in stores, was created after its founders realized they could undercut existing prices on glasses and go direct-to-consumer—and the brand took off, becoming a poster child of the e-commerce movement that would spawn many a “Warby Parker of X”s. In 2017, the company became profitable on an EBITDA basis for the first time since its founding in 2010.
While Warby Parker did not disclose more recent financials or updates on its performance amid the the pandemic, Warby Parker co-CEO Neil Blumenthal told CNN earlier this month that the company closed all 120 of its physical locations when the virus first hit stateside, representing a “big chunk of our revenue.” But, as many other brands also have experienced, online business “has gone gangbusters” he said, while most of the company’s stores have also reopened.
“We’re lucky to be in a category like glasses, which is a necessity,” Blumenthal said.
What makes a direct listing that allows you to raise funding different from an IPO?
Warby Parker has long been on the IPO watch list, with co-CEO Dave Gilboa suggesting in 2018 that it was in the stars at some point in the future.
Of course since 2018, there’s been a swirl of new ways to go public. There’s the first iteration of the direct listing, through which companies have raised existing shares without additional capital; there’s the much talked about SPAC, during which a company combines with a publicly traded shell—and now, there’s the direct listing that can raise additional capital.
On Wednesday, the Securities and Exchange Commission approved a proposal from the New York Stock Exchange that will allow companies to issue new shares via a direct listing process. The move could boost the popularity of the financing method that was once suitable only for cash-rich private companies with strong brand recognition.
So now, what separates an IPO from a direct listing? Well, the company going through the direct route is likely to pay fewer fees as they are hiring bankers as advisors rather than underwriters. Direct listings also tend to have no lockup period, or multi-day investor roadshows used to price the stock. Though that also means banks won’t provide price stabilization should the price fall in the first day of trading.
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