Rebag, which buys, sells and trades luxury items like handbags and accessories, raised a $33 million Series E round following a year of technology development and category expansion.
We profiled Rebag back in 2015, when its name included two “g’s,” (gotta love URL availability) and had raised $4 million in seed funding to go after incumbents like The RealReal.
Novator led the latest round, with participation from existing investors, including General Catalyst, to bring the company’s total funding to date to $101 million.
Charles Gorra, founder and CEO of Rebag, declined to talk about valuation, but did say it was “a steep evolution from the last time.” The “last time” was a $15 million Series D round in 2020, also led by Novator.
At that time, Rebag’s path was uncertain, with the global pandemic, Gorra explained. He took the $15 million to have some buffer as the company weighed its options. What happened was that the company ended up with two strong years of revenue growth — 50% in 2020 and 70% estimation for 2021 — basically close to triple the amount of growth over the two-year period, he said.
“It was a function of COVID generating digitization of underpenetrated industries, in particular luxury,” Gorra added. “Before COVID, purchases of luxury goods was 8% in the U.S. and now it is closer to 20%. Luxury stores can be uncomfortable, so our goal was how to make that experience more approachable.”
The company has since seen a trend of owning fewer items, but of those that are purchased, they are of higher quality, are made better, are longer lasting and retain some resale value. That’s important in the luxury space because Rebag’s average ticket is $2,000, so when you spend that kind of money, you want to build trust, Gorra said.
In the past 12 months, new categories, like fine jewelry and watches, grew four times. Gorra cites the company’s ability to triple its sourcing capabilities after launching its Clair AI and Clair Trade technology in 2020. The marketplace now has more than 30,000 items.
Rebag’s Clair technology suite includes proprietary software that can instantly recognize and price bags from the top 50 luxury brands, through an app or by uploading an image, and an offer from Rebag to buy it. The other software tool is an instant trade-in program for the buying and selling of items in one transaction.
Gorra intends to use the new capital to continue technology development on those tools, to add to Rebag’s workforce of 150 people and expand its marketing. The company currently has seven brick-and-mortar stores across New York, Los Angeles, Miami, Beverly Hills and Greenwich, Connecticut, with plans to add more in 2022.
“The market for venture capital is active and favorable, and we seized on that opportunity to accelerate funding,” he added. “There is a massive opportunity for the resale market — it is booming, and we believe we have created something special.”
Also over the past year, the company modified its retail model, adding high-tech touch points throughout the store, including the “Clair Corner,” a self-service kiosk where customers can receive an instant price quote on the item they are selling. In addition, its “Rebag Bar” in New York offers a personalized digital shopping experience, including being able to purchase and pay for resale items within an hour.
Though Gorra believes the luxury goods resale market is still in its infancy, citing that one out of 10 luxury items are transacted in the resale market, there are dozens of secondhand marketplaces for handbags and other items, also those not necessarily luxury goods.
The secondhand market is expected to double and reach $77 billion by 2025, according to ThredUp, which went public earlier this year after raising over $300 million in venture-backed funding.
Gorra sees The RealReal and Poshmark being the closest competitors to Rebag. Even so, he says that the average ticket purchases are vastly different: The RealReal is $500 and Poshmark is $30 compared to Rebag’s $2,000, he noted.
Another differentiator is that Rebag controls the purchases and sales versus some of the other platforms that are peer-to-peer sales, sometimes causing those transactions to take days as each party manages their own sides.
“We believe our value prop is on the high-end goods market and want to be the trusted place for premium resale,” Gorra said. “We want to be a leader in this space, where we believe there will eventually be a large resale ecosystem, and we want to be a part of it.”
Update 12/15, 8:42 a.m.: The company amended its funding round size to $33 million from $35 million.