le tote

Clothing Rental Startup Le Tote Lands $8.8M In Series A Funding

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The “sharing economy” has been a buzzy concept for several years now — but if startup investor activity is any indication, the trend isn’t going anywhere any time soon.

The latest example of this is that Le Tote, the “Netflix for clothing” startup that rents out apparel and accessories for women to wear and return (you can read a more in-depth description of the company here), has snapped up a hearty new Series A funding round worth $8.8 million led by Azure Capital Partners. Also pitching into the round were Lerer Hippeau Ventures, Simon Venture Group (which is associated with the shopping mall conglomerate Simon Property Group), AITV, Epic Ventures, Arsenal Venture Partners and Funders Club. Le Tote had taken on an undisclosed amount of money in seed funding back in July 2013.

In a phone interview this week, Le Tote founders Brett Northart and Rakesh Tondon said that Le Tote is coming off of a year of big investments infrastructure and growth in users and staff. “We started 2014 with 13 employees, and at the end of the year we had 100,” Northart said, adding that the company also just moved into a new 25,000 square foot warehouse in San Leandro, California. The new cash will be put toward more infrastructure and inventory, he said.

Le Tote’s founders declined to talk specifics in terms of user numbers or sales, but Northart and Tondon told me that the company’s revenues grew by 600 percent in 2014, and that it is retaining 94 percent of its users month-over-month. Though it is burning operational cash at the moment as it invests in expansion, Le Tote’s founders say that the business is profitable on a per-transaction basis. That may sound like a given for a fashion-focused company, but it’s actually not in today’s world of venture-backed consumer startups.

While there’s no shortage of fashion startups nowadays, Le Tote has carved out a unique niche for itself at the intersection of a few hot spaces: subscription e-commerce, technology-fueled “personalized shopping,” and collaborative consumption. And although all three of those trends have proven to be tricky for a number of companies in recent years to master, there’s no doubt that they’re promising concepts. It will be interesting to see how Le Tote tackles them as it grows in the months ahead.