Rent the Runway Takes Steps Toward IPO, Not Set in Stone

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Jun. 3 2021, Published 3:45 p.m. ET

Touted as an industry disruptor, woman-owned Rent the Runway has definitely shaken the pot—so much so that it's taking steps toward an IPO.

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While the Rent the Runway IPO isn't set in stone, executives are developing partnerships with underwriters who are interested in backing new shares. 

Who owns Rent the Runway?

Rent the Runway was co-founded by Jenn Hyman and Jenny Fleiss in 2009. A full 12 years later and the company has raised more than half a billion dollars in venture capital. They completed a series F funding round in 2019 worth $125 million, led by Bain Capital Ventures.

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The vision that Hyman and Fleiss brought to the table has paved the way for a unique operation—one that caters to the subscription-based mania in the current business world. Subscription models help boost profitability. Rent the Runway's involvement in both special occasion designer outfits and work and everyday-wear subscriptions means that the company is covering its bases. The recent resale announcement shows even more growth on the horizon.

RTR's revenue earned it the unicorn label

A unicorn is any startup that exceeds $1 billion in valuation. Rent the Runway earned its seat at the table and maintains a post-money valuation of around $1 billion including funding.

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The revenue is estimated at $100 million annually. The company's metrics for 2020 were likely impacted due to reduced demand during the COVID-19 pandemic. However, the outlook seems bright for Rent the Runway as in-person work and socialization become a firmer reality.

Gwyneth Paltrow joined the Rent the Runway Board, which could be good or bad.

Celebrity actress and business owner Gwyneth Paltrow has been in some hot water for her business with Goop, which has been sued for deceptive health claims many times over. Paltrow recently joined the board for Rent the Runway, the outcome of which could go in either direction depending on the decisions she contributes to.

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CEO Hyman posted on LinkedIn, "Gwyneth’s keen understanding of consumer psychology and unparalleled ability to tap into and define the cultural zeitgeist will play a key role in propelling Rent the Runway forward in a post-pandemic world."

What to expect with the potential Rent the Runway stock

Right now, Rent the Runway is simply interviewing bankers to help underwrite and financially advise a potential offering. Nothing is set in stone, so don't get too excited just yet. However, the company is taking all of the logical steps toward releasing an official registration statement with the SEC, so it's highly likely the motive is there.

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As for when it will happen, speculation says sometime in 2021. Usually, companies will hold out on releasing a firm IPO date until they've announced the offering and priced the shares, which means that we'll have to wait to answer that question.

Hyman added in her note, "As a business founded on the central thesis that experiences are more important than ownership, RTR is positioned at the precipice of a once-in-a-generation opportunity. Just as Netflix data was a reflection of who we were as a society during COVID lockdown, Rent the Runway data is now telling us the story of who we are in a post-COVID world."

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