Investors from the venture capital and private equity world remain actively on the prowl for investment ideas to add to their portfolios.
Digitally-native brand Rebag, which resells luxury handbags, has completed a $25 million Series C funding round and said Thursday it will use a portion of the proceeds to build out its store base. The company is planning on opening 30 stores over the next few years.
The round was led by private equity firm Novator, an existing investor. Other participants included past investors General Catalyst and FJ Labs. The company has raised an aggregate total of $52.5 million. In August 2015, Rebag raised a $4 million seed round, followed by its Series A in May 2016, which raised $8 million and was led by General Catalyst. The Series B from July 2017 raised $15.5 million, led by General Catalyst and Novator.
Rebag’s funding round is the latest to garner the attention of venture capital and private equity firms. These firms have been particularly active in the last three weeks alone.
Last month, SaaS platform Contentsquare, which helps retailers and brands pull together customer data so they can better understand the consumer experience, raised $60 million in a Series C round led by private equity firm Eurazeo. Fin-Tech cash-back service app Dosh raised $40 million in a Series B round that combined equity and venture capital financing led by Goodwater Capital.
And the companies investors are looking at aren’t limited to just early and middle stage start-ups that have a technology component. LB Equity Group, a private equity firm, just raised $50 million for its LB Equity fund to focus on cannabidiol, or CBD. Its first investment was Standard Dose, which markets CBD-focused food and beauty products. Hair color firm Madison Reed raised $51 million in a Series D round, with long-time investor Norwest Venture Partners as co-lead on the raise.
In the case of Rebag, Novator partner Birgir Ragnarsson said the resale model is both transformative to the industry and the environment, and to consumer buying behavior in general.
“The luxury resale market holds incredible growth potential. consumers see high-end bags as investments, and Rebag both provides an entry point to the luxury ecosystem and sustains it. Ultimately, resale will become a pillar of the overall luxury ecosystem, as brands and retailers start to recognize the synergies,” Ragnarsson said.
Charles Gorra, Rebag’s founder and chief executive officer, said of his firm, “We are a technology company first,” adding that the company is working on tools to standardize the resale process, similar to how the Kelley Blue Book is the main resource for the auto industry.
In addition to the plan to open 30 stores over the next few years, the company will use some of the proceeds from the funding round to add to its leadership team, as well as increase its technological capabilities connected to pricing tools and algorithms. The company began as a digital operation, opening its first pop-up shop in SoHo in Manhattan in November 2017. That store became a permanent site, and was followed by the opening of the Madison Ave. location in April 2018. Last year also saw the opening of three more stores, with one each in the Beverly Hills and Melrose Place sites in Los Angeles and in Downtown Manhattan at the Westfield Mall.
In a telephone interview with Sourcing Journal, Gorra said the plan is to open between five to 10 stores annually for the foreseeable future, focusing mostly in the U.S. before looking at overseas opportunities. The company-operated stores also feature the handbag bar, a central desk along one wall where consumers can sell their bags. They receive a price quote, authentication of the bag, and the funds from the sale all within one hour.
Gorra said most sellers use the time waiting to check out the bags that are available for resale. The company last October also started its Rebag Infinity program, which Gorra said lets Rebag buyers return to the store within 6 months of purchase to resell the bag for at least 70 percent of the purchase price, with the proceeds available as a store credit for the next purchase.
“Our data identified six months as the sweet spot, with consumers buying in March for the summer and then flipping the bag in September or October for the winter months,” he said.
And while the company has been opening stores, sourcing for its inventory base is still mostly from the digital footprint where consumers will send in their bags for authentication and valuation. That doesn’t make the stores any less important.
“The stores fuel a dual purpose,” the Rebag founder said. “They can sell their bags within one hour, but where the stores are even more sticky than the website is in the repeat buying patterns. They will come in and go through the whole loop of buying and selling in the stores [during that hour-long wait).”