Could a company that doesn’t actually sell anything secure a major round of funding? Rent the Runway recently proved that this is possible by raising $60 million in Series E funding, led by Fidelity Investments.
Rent the Runway is a fashion brand — sort of. But instead of selling high-end clothing and accessories, the company just rents them out. So instead of consumers having to spend all of their hard-earned money on designer pieces that they’ll only wear a few times, they can pay a discounted price to just rent that same item for a weekend.
The company also has a subscription model where customers can pay a flat monthly rate for the ability to constantly rent out designer pieces throughout the month. And it has started adding retail locations to its business model as well.
As far as the funding is concerned, the company plans to use it to increase the products it offers for both rentals and subscription customers, as well as grow its retail presence and operational capacity.
An Example of Innovation Success
But perhaps the bigger story for small businesses here is the success of a company that’s using a new and different approach in an established industry. There’s no shortage of fashion designers and brands selling clothing and accessories out in the marketplace. But today’s consumers are increasingly cost-conscious and open to new and different ways to save on everyday purchases.
So instead of going the same old route as every other fashion retailer, Rent the Runway found a way to appeal to customers looking for a new way to sport their favorite designer labels. And if other startups can apply a similar sense of creativity and innovation to their own offerings, it could be the start of a win-win situation for both businesses and consumers.
Image: Rent the Runway
I’ll be interested to see if they get any push back from the designer brands they’re renting. These brands are built on exclusivity, so they might not be excited about seeing their items worn more often.
I have been thinking about this model for quite a while. Wouldn’t it be great to get new stuff and don’t pay for them? It can also do a lot for reducing clutter.