INSUBCONTINENT EXCLUSIVE:
Rent the Runway today announced that it has partnered with Temasek for a $200 million credit facility.Founded in 2009, Rent the Runway lets
users rent items of clothing for special events or occasions, bringing runway styles to folks without the cash to purchase the clothing
outright.Rent the Runway started out by letting users rent their wares for about 10 percent of the item price
But in 2017, RTR introduced a subscription model, giving users unlimited rentals for $89/month.The model has already been proven by other
RTR started giving users access to fashion in the same way that Netflix gives users access to video, Spotify gives access to music, or even
the way ClassPass gives users access to studio fitness classes.Since the subscription launch, RTR subscription business is up 150 percent
year over year, and represents 50 percent of the company overall revenue.According to the release, RTR will use the new funds to continue
growing its subscription business, expand operations, and refinance its existing debt facility
As part of the deal, Temasek has received an observer seat on the board of directors.In response to the question around why Rent The Runway
chose a credit facility over traditional VC investment, CFO Scarlett O&Sullivan had this to say via email:We are very pleased that the
company has demonstrated the kind of business model, growth prospects and financial discipline that make it possible to access a credit
facility of this size with an equity-minded long-term partner like Temasek & they have a proven track record of supporting disruptive
high-growth companies.We were specifically looking for debt for three key reasons:1 & This facility gives us the ability to access more
financing & we can draw capital as we need to, giving us flexibility to grow our subscription business more quickly2 & We improved the terms
of our prior facility which we refinanced with a portion of these funds — and debt for us is a lower cost option to finance the business3
& It is less dilutive to our existing shareholders & we believe there will be significant value creation over the next several years as we
continue to change consume behavior and help women put their closet in the cloudBefore this latest deal, Rent the Runway had raised more
than $200 million in funding from investors such as Bain Capital, KPCB, Highland Capital, TCV, and more.
