Vinted, a digital market place for second hand fashion has well and truly reinvented the jumble sale after the start-up unlocked ‘unicorn’ status with its most recent investment round. The company, founded in Lithuanian capital Vilnius, raised €128 million from investors at a valuation of over €1 billion. A ‘unicorn’ is a start-up that attracts investment that values the company at a minimum of $1 billion.
Vinted was founded in 2008 by the Lithuanian entrepreneurs Milda Mitkute and Justas Janauskas. The company becomes the first ‘unicorn’ to come out of the small Baltic nation. The platform’s potential was spotted early and attracted investors including Accel, also an early investor in Facebook, and early stage Twitter investor Insight Venture Partners. The company’s latest investment round was led by Lightspeed Venture Partners and has also been backed by Vinted’s earlier backers – Insight Venture Partners, Accel and Sprints Capital and Burda Principal Investments.
Vinted is a prime example of the recent development of what is being referred to as the “circular economy”, that facilitates the resale of used items. The trend is being driven by a combination of the digital economy, common sense that there is still value in useful items that remain in good condition and no longer being used by their original owner, and a growing desire by many consumers to reduce their waste footprint.
The fashion and textile industry is one of the world’s largest polluters, leading to more emissions than the aviation and shipping industries combined. The industry also uses huge volumes of water as textiles are dyed and treated.
The fresh capital raised by Vinted is earmarked to fund further European expansion and to improve the functionality of the platform as well as optimising the buying and selling process. The company currently operates across 11 markets in Europe, including the UK. The company’s chief executive Thomas Plantenga commented on the deal:
“We are approaching an inflection point in the market for second-hand fashion; consumers are increasingly conscious of their buying choice.”
New functionalities and features will be aimed at helping Vinted’s users to “sell faster and buy from a wider pool of products.”
Achieving unicorn status marks a remarkable turnaround for Vinted, with the company on the very of running out of cash in 2016. Tweaks to the business model got things motoring again, culminating in this week’s successful investment round. As explained by Mr Pantenga:
“We changed the business model in 2016 to make the costs as low as possible for users to list clothes. That produced a dramatic change in our growth trajectory.”
The company says that around 75% of Vinted’s users have never bought or sold second hand clothes before joining the platform. Mr Pantenga believes the single biggest driver for the industry as a whole is that “the stigma is no longer there”, and that buying used garments has become socially acceptable.