Rent the Runway, the online service that provides designer dress and accessory rentals, announced on Thursday a $125 million investment co-led by Franklin Templeton Investments and Bain Capital Ventures that values the company at $1 billion. The financing is the largest funding round Rent the Runway has raised to date, and will bring total equity raised to approximately $337 million since inception, positioning the female-founded and female-led company to scale the growing subscription business and proprietary reverse logistics technology.
The capital will enable Rent the Runway to accelerate its subscription service and continue to innovate its proprietary technology and infrastructure. Key areas of investment focus include scaling Rent the Runway’s subscription business, which grew 160 percent year-over-year; broadening assortment and category offerings to serve all parts of customers’ lives, including the closet, home and beyond; and expanding Rent the Runway's proprietary reverse logistics operations and technology, with an immediate focus on its anticipated second fulfillment facility opening in Texas this spring. In tandem with the investment, Sara Araghi, research analyst and portfolio manager at Franklin Templeton, has been appointed to Rent the Runway’s board of directors, making her the fifth woman on the Board.
“Shared, dynamic ownership is a movement that Rent the Runway has pioneered over the last decade, and we’re excited to continue to lead the market and innovate our subscription service,” said Jennifer Hyman, co-founder and CEO of Rent the Runway.
Total Retail's Take: With this new round of funding, Rent the Runway has been dubbed a "unicorn," which is Silicon Valley-speak for startups valued at $1 billion or more. Earlier this week, beauty brand Glossier hit unicorn status as well, reaching a valuation of $1.2 billion. Unicorns may soon need another name, however. While they used to be a rarity in Silicon Valley, they're becoming more and more common. They do, however, remain elusive for female founders. As of May 2018, of 130 VC-backed unicorns in the United States, only 14 had a female co-founder. Glossier Founder and CEO Emily Weiss, and Rent the Runway Co-Founder and CEO Jennifer Hyman and Co-Founder Jennifer Fleiss have now joined their ranks.
It's not surprising that investors are bullish on Rent the Runway and it business model. After all, since its founding 10 years ago, Rent the Runway has consistently scaled and diversified; has been able to tackle difficult fulfillment issues; and has focused on a data-driven approach to meet its customers’ needs. And, perhaps most importantly, it has helped its mostly millennial customers live "a more sustainable and cost-effective life," according to new board member Sara Araghi in a statement.