The circular economy – where consumers themselves are both suppliers and buyers of goods and services – has taken off in the last year of foreclosure as a popular and reliable way to buy and sell things. Now one of the biggest players in this system – the Vinted clothing and home goods market – is making huge sums of money. The European start-up announces today that it has closed a round of funding of 250 million euros (303 million dollars at current rates), a financing which values the company before the money at 3.5 billion d euros ($ 4.2 billion, or $ 4.5 billion after the money).
The funding is led by EQT Growth, with participation from Accel, Burda Principal Investments, Insight Partners, Lightspeed Venture Partners and Sprints Capital – all former funders – also participating. This is a big leap for Vinted, which was valued at $ 1 billion in its round at the end of 2019. It was, of course, just before the pandemic hit – a sign of the positive impact of the past year on Vinted and that business model as a whole.
It’s a huge deal for the company as well as for the country that produced the startup. Founded in Vilnius, Lithuania, in 2008, Vinted is present in 13 markets – France, Germany, Belgium, Spain, Italy, Netherlands, Austria, Poland, Czech Republic, Lithuania, Luxembourg, United Kingdom and United States – and will use the funding to double that while also penetrating more distant markets, such as its operation in the United States.
In total, out of that footprint, Vinted currently has some 45 million users (which is an interesting number in this case: 45 million = $ 4.5 billion valuation), who upload their own clothes or items for the house to sell or buy those uploaded by others. Users pay no registration fees, but Vinted takes a ‘buyer protection’ rate of between 3% and 8% of the cost of an item, or a direct discount (in UK – between 0, £ 03 and £ 0.08), depending on the value of the property.
(Note: buyer protection also in fact is buyer protection, and the terms thereof are set out here.)
The circular economy is often seen as a useful system that not only helps make the most of things in a sustainable way, but gives people a better deal by removing some of the rest from the retail chain. It’s a very compelling concept last year, where people are spending more time at home and looking to declutter those spaces, or out of work and looking to earn extra cash or save money, or just rethinking the way the world works. and how we got to where we are today, and trying to do their little bit by engaging with their communities in a different way.
It is also one of the oldest and most primitive types of sales techniques. Before malls, Amazon and the like, you could say that being more circular is right in our bones.
However, in less prosaic terms, this also injected a lot of real money into the concept of the circular economy. In 2015, researchers estimated that the wider circular economy represented a $ 4.5 trillion opportunity (this includes the many services as well as the goods sold between people). Last November, it was estimated that fashion alone represented a $ 5 trillion circular economy opportunity – a sign of the impact of Covid-19 on the concept. Some have even argued that the role of the circular economy could even help some of the most affected communities to extricate themselves from the negative economic effects of this virus.
Vinted isn’t the only company to profit from it. Wallapop, another second-hand exchange outside of Spain, recently raised $ 191 million. The question will be to know which of these actors of the circular economy will be, ironically, the most sustainable in itself. eBay, which also saw a sharp increase in sales last year (and was somewhat of a pioneer in the online circular economy), has started giving signs that its rise may be fading.
Indeed, perhaps in keeping with the practicality of what he built – no need to throw away perfectly good things! – Vinted himself is very straightforward and doesn’t talk about his business even when he seems to be going very well.
“The past 18 months have been tough,” CEO Thomas Plantenga said in an interview. The company actually took a complete halt to operations for about the first two months of the pandemic’s emergence to figure out how to proceed with its market while keeping people safe with Covid and not violating any rules imposed on activities in different markets. . Things bounced back pretty quickly after that, he conceded, but it’s also a sign of how quickly the change can be between partying and starvation in this industry. Plantegna himself was brought into the business a few years ago to help with its turnaround strategy, indicating that just being a second-hand market is not necessarily so turnkey. as it seems.
Part of the power of the business lies in its focus. Plantenga said the company is strict enough to enforce that the market is only used for fashion and home goods (which are adjacent to fashion): no cars, no big furniture, no animals, no meal kits. And no channel for brands or retailers to resell seconds on the platform, which seems like an obvious category to add to a market where people are looking for fashion bargains, but which is not in line with the business philosophy, he said.
“Yes, it could be a great opportunity, but we voluntarily refused,” Pantenga said. He recognized that overproduction was one of the many problems in the fashion industry, but not one it was going to solve. “We don’t think it’s our job to solve this problem. We want more to set consumer trends. All these problems related to the industry and the production of fashion, there are a lot of them. We focus on making the second hand your first choice. Yes, that could be a great way to develop GMV, but that’s not how we strategize. “
Longer term, the company also plans to create an avenue to make it easier to download and sell products on the platform for charity. In countries like the UK, charity shops are an important channel for second-hand goods, where people don’t unload the items to earn money but to help organizations like Oxfam or the British Heart Foundation to sell them in order to collect the funds essential for their activities. . Plantenga said Vinted is currently working on a way to give sellers the option to download to sell for a charity of their choice, or for those who buy to donate their fees to charity. This is currently being tested in Vinted’s French operations, he said.
“Vinted is transforming the used fashion market across Europe with its customer-centric approach and extraordinary execution,” said Carolina Brochado, EQT’s growth partner, in a statement. “Vinted is the perfect example of EQT Growth’s strategy of supporting fast-growing European technology champions who tap into several macroeconomic trends, such as growing consumer demand for sustainability and continued penetration of online channels. in fashion. We are extremely proud and excited to support Thomas and the Vinted team and look forward to working together to further unlock the circular fashion market. She also joins the board with this trick.