Rent the Runway Becomes Unicorn With Mutual Fund Backing

Hyman plans to use the new cash to grow Rent the Runway’s subscription service, broaden the assortment of inventory that can be rented and build supply-chain infrastructure.

The company is expanding on many fronts. In coming months, Rent the Runway will open a new fulfillment center in Texas, a major store in San Francisco and a technology office in Ireland. Hyman plans to grow a network of drop boxes, which members use to return merchandise, to more than 100 by the end of the year.

Rent the Runway will continue to seek out partnerships as well. The drop-box network started as a deal with office-space startup WeWork Cos. and has since been extended to corporate locations such as Goldman Sachs Group Inc. Earlier this month, the company entered a pact with Williams-Sonoma Inc.’s West Elm unit to rent out home decor.

Hyman went looking for more funding after securing a $200 million credit facility last summer, as she looked to further accelerate the growth of Rent the Runway’s subscription business. Though she would not comment on a timeline for a possible sale or initial public offering, Hyman said the funding puts her company in control of its “financial destiny.”

Franklin Templeton and T. Rowe Price are particularly valuable backers should Rent the Runway choose to IPO, she noted. These mutual fund giants often back later-stage startups before the companies sell shares to the public.

“We have many strategic paths forward, obviously one of them is becoming a public company,” said Hyman. “We wanted to build relationships early with key public investors because we want their guidance.”