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  • Innovation
  • Players’ Strategy
  • United States

Rental Services: Rent the Runway Closes a Funding Round, Becomes a Unicorn


  • The American FinTech Rent the Runway –which features online rental services for clothes and decoration items– just closed a $125 million funding round.
  • Main investors: Franklin Templeton Investments, Bain Capital Ventures, T. Rowe Price Group and Hamilton Lane Advisors.
  • This funding round increased their valuation to $1 billion.
  • Rent the Runway was founded in 2009 as an online service providing its users with rental services for everyday clothing. Their business has been expanded since to include subscription-based offers and leasing services for decoration items. They also opened brick-and-mortar outlets when customers can try on the objects they intend to rent. They became one of the leading US platforms for renting designer clothes, accessories and decoration objects, with over 600 brands featured.
  • Three rental offers are now proposed:
    • 1 for renting items per unit,
    • And 2 subscription-based offers enabling customers to rent an unlimited number of fashion goods, yet no more than 4 items at once, for $159/month. => These 2 offers account for 60% of their sales figures.
  • In addition to their website, Rent the Runway relies on 5 stores in New York, Chicago, Topanga, San Francisco and Washington, allowing customers to try clothes prior to renting them.
  • Their subscribers can also purchase items at discounted prices.


  • The point of this funding round. Boost their subscription-based business, expand their range of rental offers for clothes and interior decoration items: “create the Amazon Prime of rental” and apply their service to more product categories.
  • Enhancing customer relations in the US. This funding round should help them open a new store in Dallas to also target customers on the Eastern coast.
  • A new R&D unit will also see the day in Ireland.

Bet on the ongoing growth of the rental market for consumer goods. Between January 2017 and December 2018, their number of partners increased two-fold, and they also signed up Marni and Proenza Schouler to increase customer satisfaction levels.


  • Rent the Runway believes leasing services will be part of the future of fashion, as it will be in other industries (car industry, home appliances, etc.). Some customers want access to these products but don’t necessarily want to own them.
  • This new unicorn is not aiming for international reach yet: a market likely to be worth up to $1.9 billion by 2023 (according to the firm Allied Market Research).
  • For their US expansion, Rent the Runway launched their own brand, Designer Collectif, this January in partnership with fashion designers. They can then rent exclusive articles.
  • Likewise, they will have to face competition from several rivals including The RealReal, Poshmark or Stitch Fix (an online personal styling service which went public in 2017).
  • Rent the Runway may also be considering an IPO.