Designer rental site Rent the Runway, which launched 18 months ago and already has 1 million members, has received a venture capital boost to take it to the next level. The online apparent and accessories rental company—which boasts 140 designers and 25,000 dresses and accessories items, just received $15 million shot of venture capital from Klein Perkins Caufield & Byers (KPCB). That is on top of the $16-plus million it got from Bain Capital Ventures and Highland Capital, and seed funding pre-launch from Bain Capital Ventures in early 2009.
Rent the Runway was co-founded by two friends from Harvard Business School, Jennifer Hyman and Jennifer Fleiss, with the mission to offer deeply discounted designer items for rent to women who want to “try before they buy” or just can’t afford to own the real thing. “The success of KPCB’s past and existing portfolio companies is a sign of the incredible strength of their team who we are thrilled to work with,” says Hyman.
Their tagline? Love. Wear. Return
Key to this rapid expansion has been its ability to serve as a marketing and customer acquisition channel for its partnering brands. According to Jenny Fleiss, President and co-founder of Rent the Runway, “Ninety-eight percent of our customers are trying brands they’ve never before worn. Our customers are having an intimate and emotional experience with that brand as they wear it to a special occasion in their life – whether it’s a wedding, prom, or a cocktail party. We are introducing experiential brand marketing into the fashion industry – not just a onetime transaction – which is the power behind Rent the Runway.”
Improvements will include:
- A sophisticated inventory and reservation management system with embedded predictive capabilities.
- Rent the Runway will also open the first of multiple warehouse hubs outside of New York City in January 2012.
- Rent the Runway will personalize the shopping experience with proprietary algorithms rivaling that of Netflix.
- New designers added at both higher and lower price points to accommodate Rent the Runway’s diverse customer base. New designers include Thakoon, Carmen Marc Valvo, Z Spoke by Zac Posen, Versus by Versace, Narciso Rodriguez, Kate Spade, Anna Sui, Opening Ceremony and Rachel Zoe. Deeper quantities will also be purchased from Rent the Runway’s current roster of 140 designers.
- Investments in key talent positions in technology and operations. Recent key hires include Nisha Kumar, Chief Financial and Administrative Officer, who was in previous executive roles at AOL and Priceline.com.
Increased Accessories Push
While dresses are the site’s main focus, accessories have a significant place on the site and are paired up with selected dresses. About 15% of the inventory is accessories, with rental prices for accessories starting at $10.
At the upper end, the site offers a selection Judith Leiber bags—retailing from $995 to $2,495—for rental fees of $100 to $225. An $845 Dannijo statement necklace can be rented for $85.
Brands include: Dannijo, Ciner, Badgley Mischka, Nicole Miller, Janis Savitt and Tom Binns. “Our current expansion plan for accessories is to continue adding jewelry and handbag designers,” says Fleiss. “While no specific category expansion is planned no idea is completely off the table.”
Consumers can view merchandise by occasion (i.e. Summer Beach Wedding, Date Night, Prom), with accessories and apparel appearing on those pages. They can also chat with a stylist who will walk them through the selection process.
To avoid scheduling conflicts, the site asks consumers to enter the date of their event (requesting a few-day cushion), which then reserves your item so it’s not rented by someone else. And for that last-minute date? The site has an “Available this Weekend” tab.
And when that Cinderella moment is over, Rent the Runway gives consumers a pre-paid envelope so they can pop their merchandise return into into a mailbox.
ABOUT KLEINER PERKINS CAUFIELD & BYERS:
Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in over 600 ventures, including Amazon, Amyris, Bloom Energy, Electronic Arts, Genentech, Google, Intuit, Netscape, Sun, Symantec, and Zynga. KPCB portfolio companies employ more than 250,000 people. More than 150 of the firm’s portfolio companies have gone public. Many other ventures have achieved success through mergers and acquisitions.