VCs and Wall Street have pumped $400 million into the online clothing resale business to beat back eBay and Amazon.
James Reinhart spent months trying to get somebody, anybody, to invest in his idea: an online clothing exchange for women and kids.
He would rent a Zipcar and drive out to Boston's Route 128, a venture capital hot spot, with his pitch deck in hand. Then he'd fly to San Francisco to navigate Sand Hill's labyrinth of venture firms.
The VCs shot him down 27 times, some of them laughing in his face. At one meeting, one of the firm's partners asked if the idea was to have women swap their panties. Reinhart, then a 30-year-old recent Harvard Business School graduate, shrugged it off.
"I was just like, whatever, dude," said Reinhart. "If that's where your mind is at, we're clearly not going to do a deal."
That was six years ago. Last month, Reinhart's secondhand fashion marketplace, ThredUp, raised an $81 million round of financing led by Goldman Sachs, bringing its total funding to more than $131 million.
ThredUp isn't an outlier. There's a war brewing over the junk in people's closets, as investors funnel cash into the online clothing resale business, backing more than a dozen companies, each looking to capitalize on what they see as a weak spot for Amazon and even for resale leader eBay.
Venture capital firms poured hundreds of millions of dollars into fashion resale in 2015; total funding over the past five years has blown past the $400 million mark. In January, online consignment shop Tradesy raised $30 million. By the end of April, vintage luxury reseller RealReal had raised $40 million and social commerce site Poshmark had taken in $25 million.
European resale shop Vestiaire Collective scored a $37 million round in September. Then came Goldman's monster round for ThredUp, perhaps the most mainstream of the bunch.
"It's a category that's very much winner-take-all," said Reinhart. "VCs know that if they pick the winner, it'll have a long-term sustainable advantage."
The list goes on. There's Vinted, a Lithuania-based clothing swapper. Threadflip's full-service consignment marketplace aims for the fashionista with little time. Rebagg deals only in designer handbags. Shop Hers is all about luxury. Vaunte touts the closets of fashion insiders. Snobswap partners with offline stores. Refashioner strives to curate unique items. Material Wrld trades gift cards for unwanted clothes....MORE