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Consignment Site The RealReal Raises Another $40 Million, Says IPO Is Next

It will use the money to expand outside the U.S. and/or acquire a competitor.
Photo: Lou Beyer/Getty Images

Photo: Lou Beyer/Getty Images

It's a critical time for the competitive online consignment space: While some resale sites — like Thredup, Poshmark and Vestiaire — have been steadily raising more and more capital to fund expansion, others have either repositioned, merged with a similar company or folded altogether. Leading luxury reseller The RealReal is firmly in the former category.

The five-year-old business announced Thursday that it has raised another $40 million in its fifth funding round, bring its total funding to a whopping $123 million — about twice what competitors Poshmark and Vestiaire have raised thus far, but a bit less than what Thredup has raised. The round was led by Greenspring Associates and other first-time investors include Broadway Angels, Next Equity and Springboard Fund.

It's a lot of money, and as CEO and Founder Julie Wainwright admitted over the phone, The RealReal doesn't really need it. "We don't need this capital for stability," she explained, adding that the company is on track to become profitable by the end of this year. "It really is to give us more strategic options." And what might that mean exactly? Most likely, she said, opening a satellite office internationally and/or acquiring another online reseller that hasn't been able to grow as quickly — both moves that should bring in more sellers, which The RealReal will need to grow revenue. "Certainly there are companies that are folding or looking to get bigger by merging with another party, so that's an option."

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With over 4.5 million members and 2 million items sold, The RealReal differentiates itself from other resale sites in that it focuses on selling luxury items, which it authenticates in-house; it also takes care of the entire listing and selling process, so you basically just ship them your stuff (or have them come to your home and take it, depending on where you live) and wait for a check to arrive. This also means that The RealReal can keep tight control over supply and demand, adjusting pricing when needed. (Currently, all the site's "just in" handbags are 20 percent off.) While Wainwright wouldn't disclose 2015 revenue, the company said a year ago that it hoped to double its 2014 sales, which were around $100 million. She did say the company is "doing very well" and aiming to reach $1 billion in annual sales in "the next two to three years." (Hence why it needs more sellers.) So, what happens then? Wainwright apparently sees no limit to the luxury resale market: "In theory, this is our last [fund] raise prior to an IPO," she said matter-of-factly. "That's where we're going."

Unless a competitor gets there first, it would be the first of these online consignment startups to go public, though it wouldn't be Wainwright's first IPO. She led, where she was the CEO, into one in 2000. That same year, it famously shut down, citing insufficient funding. Here's hoping this one, which of course involves a very different site in a very different e-commerce landscape, fares better.

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