Fashion e-commerce powerhouse Rent the Runway has confirmed that it raised $60 million in a funding round led by Fidelity Investments. Technology Crossover Ventures, Bain Capital Ventures, Highland Capital Partners and Advance Publications are also participating in the round.
Recode, which first reported the news, was told that the valuation was a “significant step up” from the $520 million the company raised at in 2014. CEO Jennifer Hyman told the publication that Rent the Runway was valued the way public companies are valued, possibly hinting at IPO goals.
Hyman told Recode that the company is now profitable on an Ebitda basis and has grown its revenue to over $100 million. TechCrunch has obtained documents that show that as of last year, the company was forecasting $121 million in revenue for 2016. This is up from $44 million in 2014.
New York-based Rent the Runway has made it more affordable for women to wear high-end fashions on special occasions and counts 6 million members across the United States. As its company name implies, runway collections can be rented through the service.
But while it started out as one-time rentals, Rent the Runway rolled out its “unlimited” service this year, where customers pay a monthly $139 fee to rent items on an ongoing basis. The company also launched StylePass for a flat fee on once-a-month rentals.
While it is mostly a web-based service, Rent the Runway is also building brick-and-mortar locations in major metropolitan areas like Chicago, Los Angeles and New York. The company also recently partnered with Neiman Marcus and debuted a Rent the Runway-branded shop in the department store in San Francisco.
“This new round of funding will allow us to continue revolutionizing the fashion industry by giving millions of women access to designer brands,” Hyman said in an email to TechCrunch. “We will do this by accelerating the growth of our a la carte and subscription products, as well as our retail footprint. We will also further build out our operational capacity, which includes our world-class reverse logistics platform.”
The “unlimited” feature may prove to be popular with consumers, but it is not alone in the category. Le Tote and Rocksbox are amongst the many fashion startups offering similar membership plans.
The competitive e-commerce landscape has meant that many startups in the category have had disappointing outcomes. Gilt, for example, sold for just a fraction of its prior valuation.
Rent the Runway has raised over $190 million in venture capital over the past seven years. Other investors include American Express, Conde Nast and Kleiner Perkins.