If you thought investors were pouring alarming amounts of capital into the online consignment space a year ago, you ain't seen nothin' yet. On Tuesday, luxury resale site The RealReal announced its latest round of funding: $50 million in growth equity financing from private equity firm Great Hill Partners, bringing the company’s total funding to $173 million. That not only marks the six-year-old retailer's largest funding round yet but also makes it the most-funded e-commerce site we've covered in this space.
Trailing close behind are European competitor Vestiaire Collective with €116 million in funding, and Thredup, which features more mass brands and has raised about $131 million over the years. That investors are still pouring money into these companies isn't too surprising: According to a recent report compiled by Thredup, online resale is outpacing offline resale, off-price chains and retail as a whole with Millennials choosing these e-tailers over others, driven by financial savings as well as eco-conscious factors. (Buying used clothes is more sustainable than buying new ones.)
So what will The RealReal do with this $50 million? The company doesn't need more money just to stay afloat; it would only raise this kind of dough with plans to invest it into something that will fuel significant growth. The company pointed to a few things it has in the pipeline that this money will help to cover — scaling operations, more luxury consignment offices across the country, and retail concepts, including a concept store planned for New York this winter — and it's also natural to speculate that the company intends to make an acquisition. "Certainly there are companies that are folding or looking to get bigger by merging with another party, so that's an option," CEO and Founder Julie Wainright told Fashionista last April. Asked whether this latest round is a sign that we can expect an acquisition in the near future, Wainright said only, "no comment."
Read into that what you will, but given how serious The RealReal seems to be about growth, an acquisition looks likely. Wainright did confirm that The RealReal "will IPO at some point," but "not in the near term." Watch this space.