Online luxury reseller The RealReal Inc. isn’t sharing any information about IPO plans, but it has reportedly begun talks with investment bankers about a possible initial public offering later this year.
The company was said to be considering an IPO last year, but instead went on to raise $115 million in a Series G private funding round in July. The round was led by Perella Weinberg Partners, and included new investor Sandbridge Capital. The total raised upon closing of the Series G round since the company’s inception, was $288 million.
A spokeswoman for The RealReal on Wednesday declined comment.
The RealReal was founded in 2011 by e-commerce entrepreneur Julie Wainwright. She was formerly chief executive officer of Reel.com and later was CEO at Pets.com. The online platform began with a focus just on women’s luxury designer fashion brands, but has since expanded to include handbags, jewelry, and menswear. It has also followed the trend of other digitally native brands with a brick-and-mortar location in Manhattan last year, followed by a second location in Los Angeles. Brands often sold on the site include Gucci, Chanel, Cartier and Prada. It wasn’t immediately clear what the company’s volume was in 2018, but The RealReal had projected $500 million in gross merchandise volume for 2017.
The RealReal uses a consignment model where it receives goods from sellers, does the authentication, and then shares in the profits when the items are sold. The idea of a secondhand platform came at a time when baby boomers were looking to downsize and sell their no longer needed luxury fashion goods. Price-conscious Millennials have fueled the demand helped in part also by the generation’s interest in the environment. They see the resale market as one way to reduce their carbon footprint, as well as help curtail the amount of discarded goods at landfills.
Should The RealReal file for a public offering, 2019 could turn into the year for fashion IPOs. Other firms considering their own IPOs this year include fashion retailer Revolve and jeans brand Levi Strauss & Co. If they get out the gate, they would follow the successful IPO of e-commerce platform Farfetch, which in September raised $885 million.
According to IPO research firm Renaissance Capital, there’s a backlog of companies that have indicated plans for IPOs this year. Firms said to be preparing for an IPO include Uber, Lyft and Pinterest. But whether they all actually get to market this year will depend in part on what happens with the partial government shutdown in Washington and when it will end. Paperwork needs to be filed with the Securities and Exchange Commission, and then someone there needs to review the documentation. There’s already a backlog of documents for review following four weeks of furlough of SEC staff. And even after everyone goes back to work, there’s no guarantee that the conditions connected to the financial markets later on would be conducive to investors having an appetite for new public offerings.