The clothes may be cheap, but prices for tech companies launching mobile and web-based marketplaces to sell secondhand and consignment clothing keep going up.
The latest company trying to get people to pop their tags virtually is Vinted, which raised $27 million in its second institutional financing – one of the largest rounds ever for a Baltic-based startup.
Fresh financing from Accel Partners and Insight Venture Partners for the Vilnius-based startup comes after Accel invested $6.6 million into the company just over a year ago to port it from a web-based application to a service primarily for mobile devices… and bring its service to the U.S.
Vinted launched in the U.S. in September 2013, after five years spent expanding in Europe, and will use its new cash hoard to develop its business here and add to its 110 employees both in San Francisco and in its Lithuanian headquarters.
“We started the company as a project five years ago that was really a hobby project,” said Vinted chief executive Justas Janauskas, in an interview. Initially it was designed to be a website where girls in Vilnius could swap or sell mid-priced clothes from brands like Zara and H&M. But with an early angel investment from Lithuanian serial entrepreneur Mantas Mikuckas, who joined as chief operating officer, the company professionalized and grew its European presence.
Vinted operates three different brands internationally: manodrabuziai.lt in Lithuania; kleiderkreisel.de in Germany; and votocvohoz.cz in the Czech Republic, but going forward will consolidate everything under the Vinted label.
In the U.S., Vinted is entering a very crowded market. Companies like Twice, which raised $18.5 million earlier this month from Andreessen Horowitz and a host of others; or Poshmark, which raised $12 million in a round led by Menlo Ventures; and thredUP, backed by Highland Capital Partners, Redpoint Ventures, and Trinity Ventures, are also competing in the category.
Unlike Twice, which operates as a virtual storefront for used clothes, housing them at its own facilities and shipping them to buyers, Vinted is more of a peer to peer marketplace and social network, according to its CEO.
Globally, online consignment and secondhand stores have raised at least $109.2 million in financing, according to data from CrunchBase.
So far, the company has 3 million members around the world and has had 14 million listings managed from offices in San Francisco, Paris, Munich, Warsaw, Prague, and Vilnius, on an app available on both iOS and Android.
The move to mobile proved to be a good one for the company, Janauskas said. “The customer retention is better; the user experience is way better than on the desktop. So naturally the company converted from desktop to mobile,” he said.
For Accel, the company’s value was clear from the moment the partners first heard about the site, said Michiel Kotting, a partner working in Accel’s London office. “[It's] half social network and chatting and half clothing exchange,” Kotting said. “They play into the same desire for second-hand clothing and a desire for the consumer to have a voice in fashion.”
That may be true, but judging from recent investments it seems that venture capitalists also want to have their voice in fashion - even if it’s just secondhand.
Photo via Vinted.