Clothing rental service Rent the Runway raises $357 million
Rent the Runway, a New York-based clothing rental service, raised $357 million in an upsized IPO. The company priced 17 million shares at $21, versus plans to sell 15 million shares at $18–$21, for a fully diluted value of around $1.5 billion.
Why it matters: Because it's the latest evidence that nothing matters. This is a consumer company that reported over $150 million in losses in each of the past two years, despite being founded in 2009 and raising nearly $700 million in venture capital.
- Plus, it excluded rental apparel depreciation from its adjusted EBITDA calculations (which were still negative).
The big picture: Rent the Runway hit unicorn status in mid-2019, before raising a pair of down rounds, and is backed by such firms as Bain Capital Ventures Ares Management, Highland Capital Partners and TCV.
The bottom line: "The rent-what-you-wear business model appeals to customers with tighter budgets who are eager to access high fashion they wouldn’t otherwise be able to afford. Wealthier shoppers also like it because it offers them more wardrobe variety and the chance to check out new brands. The services are particularly popular in big cities such as New York where closet space is often at a premium." — Crystal Tse and Jeannette Neumann, Bloomberg