Looking to take on the rental tux market with a higher-quality, lower-priced suit and tie, Black Tux has raised $2.6 million in its first institutional round of funding.
It’s the latest brand to come to market with funding led by Lerer Ventures, which has backed everything from health and beauty retailers and eyeglass makers to a company that wants to take everyone to the mattresses.
Lerer isn’t the only brand name investor behind The Black Tux, the small early-stage round also picked up commitments from First Round Capital, RRE, Founder Collective, Crosscut, Menlo Ventures, and Raine - the investment fund affiliated with William Morris Endeavor.
“Of all the rounds I have led, there has never been one that has been more oversubscribed,” said Ben Lerer, a managing director at the eponymous Lerer Ventures and the Chief Executive of Thrillist Media Group.
The Santa Monica, Calif.-based online tuxedo rental business began as an idea shared by longtime friends Andrew Blackmon and Patrick Coyne.
A little over two years ago Blackmon was trying to select the suits his groomsmen would wear at his wedding. After going with a rental option – and finding the experience “terrible” – the two decided to research the industry.
“We identified four or five things that were wrong with the industry,” said Coyne. The suits were ill-fitting, made of cheap material, poorly branded and marketed, and highly overpriced, he said.
So after nearly a year-and-a-half of research, The Black Tux was formed in 2013 and began quietly renting tuxes under its own brand.
There are three tuxedo options and two less-formal options that are available on the company’s website. Rentals for a suit or a tux range from $95 to $160 (including shoes and accessories). Clothes are fit based on either a customer’s exact measurements, or if those aren’t available customers can go to a local tailor and be measured or determined by following a tutorial available on the company’s website.
Once an order is placed it arrives within a week and The Black Tux picks up shipping costs for deliveries and returns.
“We’ve worked with a number of designers and pattern makers for our first five styles,” said Coyne. “The idea is to launch [the clothes] under the Black Tux brand, because we’re looking to build this brand, but that doesn’t mean we wouldn’t partner [with existing brands].”
Before raising the institutional round, which closed in December, The Black Tux had already raised $1 million by tapping friends, family and angel investors including Dennis Phelps, of Institutional Venture Partners, and Susan Feldman, the co-founder of One Kings Lane.
The draw for investors is spelled out in the latest Men’s Wearhouse quarterly report, which indicated that the company’s rental business netted it $142.2 million for the quarter ending November 2, 2013.
“At this point we really want to crush the rental market,” Blackmon said. “This is ripe for disruption and there’s less satisfaction with incumbents. In the future, if we have a good brand and a huge customer list, we will leverage that into something.”
These investments are happening against a backdrop of rising dollar commitments to venture-backed branded businesses, even as the number of those investments declines.
According to data from CrunchBase, 34 consumer-facing branded “fashion” businesses raised roughly $344 million already in the first quarter of 2014. The last time these businesses attracted that much attention was in the third quarter of 2011 when 38 companies raised nearly $370 million