The circular economy, in which consumers themselves are both providers and buyers of goods and services, has emerged as a popular and trusted way of buying and selling things over the last year of the lockdown life. Now one of the bigger players in this system – the clothing and homeware marketplace Vinted – is circling with a very large amount of money of its own. The European startup announced today that it has completed an all-equity round of € 250 million ($ 303 million at today’s rate). The financing values the company’s advance money at 3.5 billion euros (4.2 billion US dollars or 4.5 billion US dollars after the money). .
The funding is being led by EQT Growth, which also includes Accel, Burda Principal Investments, Insight Partners, Lightspeed Venture Partners and Sprints Capital – all previous supporters. This is a big jump for Vinted, which was worth $ 1 billion on its round in late 2019. That was right before the pandemic broke out, of course – a sign of how much the past year has had a positive impact on both Vinted and the Vinted business model as a whole.
It’s a big deal for the company and the country that produced the startup. Vinted was founded in 2008 in Vilnius, Lithuania and operates in 13 markets – France, Germany, Belgium, Spain, Italy, the Netherlands, Austria, Poland, the Czech Republic, Lithuania, Luxembourg, the UK and the US with funding to do this to double and at the same time penetrate deeper into more distant markets, such as in the USA.
In total, Vinted currently has around 45 million users (which is a decent number in this case: 45 million = valuation of $ 4.5 billion) who upload their own clothing or housewares to sell or buy those uploaded by others . Users don’t pay any listing fees, but Vinted uses a “Buyer Protection” rate which is either between 3% and 8% of the cost of an item or a direct cut (in the UK – between £ 0.03 and £ 0.08) on the value of the good.
(Note: Buyer protection is actually also buyer protection, and the conditions for this are listed here.)
The circular economy is often seen as a useful system that not only helps keep things alive in a sustainable way, but also enables people to do better business by cutting some of the others out of the retail chain. That has been a very compelling concept over the past year where people have been spending more time at home and trying to vacate those rooms or be unemployed and make extra money or save some money or just rethink how the world is going works and how we got to where we are today and tried to do our small part to connect with their communities in other ways.
It is also one of the oldest and most primitive types of sales techniques. Before dating malls and amazon and the like, it could be said that being more circular is just in our bones.
However, to put it less prosaically, this has also brought a lot of actual money into the circular economy concept. Back in 2015, researchers estimated that the circular economy represents a $ 4.5 trillion opportunity (this includes the many services and goods sold between people). Last November, it was estimated that fashion alone represents a $ 5 trillion circular economy opportunity – a sign of the impact Covid-19 has had on the concept. Some have even postulated that the role of the circular economy could help even some of the hardest hit communities survive the negative economic impact of this virus.
Vinted isn’t the only company benefiting from this. Wallapop, another second-hand swap market outside of Spain, recently raised $ 191 million. The question will be which of these circular economy actors will ironically be the most sustainable in and of themselves. eBay, which also saw a sharp rise in sales last year (and something of a circular economy pioneer online), gave early signs in the last quarter that its surge might slow down.
Indeed, perhaps consistent with the practicality of what it built – there is no use throwing perfectly good things away! – Vinted himself is very matter-of-fact and doesn’t address his business, even if it seems to be doing really well.
“The last 18 months have been a challenge,” said CEO Thomas Plantenga in an interview. The company ceased operations for the first two months of the pandemic altogether, trying to figure out how to deal with its market while keeping people safe and not violating rules that apply to activities in different markets. Things recovered fairly quickly after that, he admitted, but it’s also a sign of how quickly the shift between feast and hunger can come in this business. Plantegna itself joined the company a few years ago to support it in its turnaround strategy. This is an indication that a used marketplace isn’t necessarily as turnkey as it sounds.
Part of the company’s power was in focus. Plantenga said the company is pretty strict on using the market only for fashion and housewares (which border on fashion): no cars, no big furniture, no pets, no meal sets. And no channel for brands or retailers to resell seconds on the platform. This seems like an obvious category for a market where people are looking for fashion bargains but not in line with business ethics, he said.
“Yes, it could be a great opportunity, but we purposely said no to it,” said Pantenga. He acknowledged that overproduction is one of the many problems in the fashion industry, but not one that will address itself. “We don’t think it’s our job to solve this problem. We want more to correct consumer trends. With all of these topics related to the fashion industry and production, there are many of them. We focus on making Second Hand your first choice. Yes, it could be a great way to increase GMV, but that’s not how we strategize. “
In the long term, the company also plans to create a way that makes it easier for people to upload and sell goods on the platform for charity. In countries like the UK, charity shops are an important channel for used goods, with people not outsourcing the items to make money, but helping organizations like Oxfam or the British Heart Foundation sell them to raise much-needed funds for their activities . Plantenga said Vinted is currently working on allowing sellers to upload to sell for a charity of their choice or for those who buy to donate their fee to charity. This is currently being tested at Vinted’s French operations, he said.
“Vinted is transforming the second-hand fashion market across Europe with its customer-centric approach and exceptional execution,” said Carolina Brochado, EQT growth partner, in a statement. “Vinted is the perfect example of EQT Growth’s strategy to support fast-growing European tech champions taking advantage of various macro trends, such as increasing consumer demand for sustainability and the continued proliferation of online channels within fashion. We’re very proud and excited to be supporting Thomas and the Vinted team, and we can’t wait to work together to further develop the circular fashion market. “With this round she also joins the board.