Rent the Runway Scores $15 Million From Kleiner Perkins

News source from: http://bits.blogs.nytimes.com/2011/05/23/rent-the-runway-scores-15-million-from-kleiner-perkins/

Rent the Runway, a New York start-up that lets women rent high-end fashion items like dresses, shoes and jewelry by mail has already hit several milestones in the last 18 months. The company said it passed a million members and was turning a profit.

Next on the company’s checklist? An additional round of venture capital.

On Monday, the company announced it raised $15 million in a Series B round venture financing. The round was backed entirely by the Silicon Valley financier Kleiner Perkins Caufield & Byers. Previously, the company raised $16 million from Highland Capital and Bain Capital.

The fresh infusion of cash will go to expanding operations, said Jennifer Hyman, co-founder and chief executive of the company.

"We calls ourselves the Netflix for fashion, but the logistics of our business are very different from a Netflix or even a service like Zipcar," said Ms. Hyman. "When a dress is returned, we have to dry clean it and do repairs. How quickly and carefully we turn it around is extremely integral to the customers experience."

Ms. Hyman said the company has encountered some growing pains as the business has rapidly expanded from its start as a retail upstart in Manhattan.

To feed consumers' increasing appetite for high-end rental apparel and accessories, some of the money raised will be used to open additional distribution centers outside of New York. In addition, Ms. Hyman said the company is looking to invest in streamlining the way it fulfills orders.

"We're building an inventory and logistics-management system to track and understand how inventory moves across the country," she said.

The venture funding will also go toward expanding some of the site's features. Rent the Runway will soon include a recommendation engine to help shoppers find dresses based on the occasion they are attending, whether the event is a black-tie event or a summery wedding.

In addition, Ms. Hyman said the company planned to incorporate a new social layer that would let friends who are shopping for the same occasion coordinate their outfits, make recommendations to each other and potentially receive group discounts.