Rent the Runway cleans up on the catwalk with $60 million in funding

Nothing compliments any wardrobe quite like $60 million in cold, hard cash.

That’s how much New York-based fashion startup Rent the Runway raised in its latest round of financing, the company announced Tuesday, boosting its total funding to $190 million. Fidelity led the round — the mutual fund company also has invested in Airbnb and Uber — and Bain Capital Ventures, Highland Capital Partners, Technology Crossover Ventures and Advance Publications contributed.

Rent the Runway allows women to rent designer clothing and accessories on an on-demand or subscription basis, both online and through a handful of retail locations.

The funding news proves that although many investors have tightened their belts during the past few quarters, making funding harder to come by — there are still startups out there that are managing to raise cash. These days, experts say investors tend to favor companies with clear paths to profitability.

“We are coming off of our most successful year since the company’s inception, with the launch of our unlimited subscription business, our partnership with Neiman Marcus and our new flagship store in New York,” Jennifer Hyman, co-founder and CEO of 7-year-old Rent the Runway wrote in a news release. “We are excited to bring on Fidelity as a partner as we continue to disrupt the closet and remain at the forefront of the access economy.”

Recode reports Rent the Runway is profitable (looking at earnings before expenses such as taxes and debt), and pulls in more than $100 million in revenue.

Hyman told Recode in March that Rent the Runway, which had raised a prior $60 million in 2014, likely wouldn’t be able to raise more funding for the next two years. Apparently, that wasn’t the case.

Rent the Runway plans to use the new money to grow its a la carte rental service (which has 6 million members in the U.S.), its unlimited subscription service (which gives women access to $40,000 worth of clothing per year at a fixed monthly price) and its presence in physical retail stores (including one in San Francisco).

Photo: A model wears an accessory created by Anya Hindmarch during London Fashion Week Spring/Summer 2014, at Central Hall Westminster in central London, Tuesday, Sept. 17, 2013. (Photo by Jonathan Short/Invision/AP)

 

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