On March 16, 2021, the luxury fashion resale platform, Vestiaire Collective, announced that it had raised $216 million in a funding round led by Kering, the parent company of brands such as Gucci, Saint Laurent, and Bottega Veneta. This investment valued Vestiaire Collective at over $1 billion and is expected to help the company expand globally. However, the funding round also involved a significant dilution of the company’s shares, raising concerns among some investors. In this article, we will take a closer look at Vestiaire Collective’s Kering 1B dilution and explore its implications.
What is Vestiaire Collective?
Before we dive into the details of the funding round, let’s take a quick look at what Vestiaire Collective is and how it operates. Vestiaire Collective is a French company founded in 2009 that operates an online marketplace for pre-owned luxury fashion items. The platform allows individuals to buy and sell authenticated second-hand luxury items, including clothing, bags, and accessories, from brands such as Chanel, Hermès, and Louis Vuitton. Vestiaire Collective has over 10 million members in 90 countries and has offices in Paris, London, New York, and Hong Kong.
The Kering 1B Dilution:
Now let’s get into the details of the funding round. Kering led the round with a $216 million investment, which was joined by other investors, including US-based investment firm Tiger Global Management and French private equity firm Korelya Capital. The funding round valued Vestiaire Collective at over $1 billion, making it a “unicorn” company.
However, the funding round also involved a significant dilution of Vestiaire Collective’s shares. According to TechCrunch, the dilution was between 20% and 25%, meaning that existing shareholders’ stakes were reduced by that percentage. This dilution raised concerns among some investors, who worried that their ownership in the company had been reduced without their consent.
Implications of the Dilution:
So, what does the Kering 1B dilution mean for Vestiaire Collective and its investors?
- Expansion: One of the main reasons for the funding round was to help Vestiaire Collective expand globally. With the support of Kering and other investors, the company will have more resources to invest in marketing, technology, and expansion into new markets.
- Valuation: While the dilution may have reduced existing shareholders’ ownership stakes, it also increased the company’s valuation to over $1 billion. This valuation could attract more investors and potentially lead to a future IPO or acquisition.
- Governance: The dilution also raises questions about the company’s governance. As TechCrunch notes, Kering now holds a significant stake in Vestiaire Collective and could potentially have a say in the company’s strategic direction. However, it is unclear at this point how much influence Kering will have on Vestiaire Collective’s operations.
- Competition: Finally, the funding round and increased valuation could attract more competition to the luxury fashion resale market. Other players in the space, such as The RealReal and Poshmark, may see Vestiaire Collective’s success and decide to invest more heavily in their own businesses.
Vestiaire Collective’s Kering 1B dilution is a significant development for the company and its investors. While the dilution may have reduced existing shareholders’ ownership stakes, it also provided the company with the resources it needs to expand globally and potentially attract more investors in the future. However, the dilution also raises questions about the potential implications of the Kering 1B dilution:
Brand partnerships: With Kering’s investment, Vestiaire Collective could potentially form partnerships with Kering’s luxury brands. This could lead to more exclusive and sought-after items being sold on the platform, which could attract more customers and increase revenue.
Authenticity: As a resale platform, Vestiaire Collective places a strong emphasis on authenticity. The company has a team of experts who authenticate every item sold on the platform, and it offers a money-back guarantee to buyers in case an item is found to be fake. With Kering’s investment, Vestiaire Collective could potentially improve its authentication technology even further, which could increase customer confidence and trust in the platform.
Sustainability: Another potential implication of the funding round is the increased focus on sustainability in the fashion industry. As consumers become more aware of the environmental impact of fast fashion, they are turning to resale platforms like Vestiaire Collective as a more sustainable alternative. With the support of Kering, Vestiaire Collective could potentially expand its sustainability initiatives and continue to position itself as a leader in the sustainable fashion movement.
Overall, Vestiaire Collective’s Kering 1B dilution is a significant development for the company and the luxury fashion resale market as a whole. While the dilution may have reduced existing shareholders’ ownership stakes, it also provided the company with the resources it needs to expand globally and potentially attract more investors in the future. With Kering’s support, Vestiaire Collective could potentially form brand partnerships, improve its authentication technology, and continue to position itself as a leader in the sustainable fashion movement. However, the dilution also raises questions about the company’s governance and potential competition in the market. It will be interesting to see how Vestiaire Collective uses its new funding to grow and evolve in the coming years.