Goldman Sachs Group Inc (NYSE:GS) Invests $81 Million In Secondhand Clothes Retailer, ThredUp
Goldman Sachs Group Inc (NYSE:GS) has invested $81 million ThredUp, joining the growing list of investors that are putting their money in the secondhand clothes vendor. Besides Goldman, other backers of ThredUp are Redpoint Ventures, Upfront Ventures, Trinity Ventures and Highland Capital Partners. Goldman’s investment in ThredUp comes just about a week after it also led a round of finding in Shift Technologies, a startup that resells used vehicles online.
With Goldman Sachs Group Inc (NYSE:GS)’s $81 million backing, the funding that ThredUp has raised since 2009 now stands at $125 million. The participation of Goldman in ThredUp’s funding just about one week after putting money in Shift Technologies shows how the company believes in the potential of online resellers of used items.
Expanding the business
The investment from Goldman Sachs Group Inc (NYSE:GS) will help ThredUp to expand its operations, opening up more warehouses and hiring more workers. According to ThredUp’s co-founder and CEO, James Reinhart, they intend to recruit 1,000 addition employees. The startup currently has about 600 employees. Portion of the funding from Goldman will also go into marketing the brand and its services.
It is reported that the funding from Goldman Sachs Group Inc (NYSE:GS) values ThredUp at $400 million, although the management won’t comment on the valuation. Goldman will take a seat on the board of ThredUp following the investment.
A different business model
ThredUp may be seen like another eBay Inc (NASDAQ:EBAY) for apparel, but the CEO, Reinhart, said that they are not trying to be exactly like eBay. For example, while eBay and other marketplace operators leave customers to do most of the work in the selling process by themselves, ThredUp handles everything on their behalf.
The startup does that by letting customers put their unsorted garments in a marked bag that is then sent to the company for sorting, listing, storing and then shipping. That way, the startup is able to relieve customers of much work that goes into getting items sold through its marketplace.
The strategy also allows the company to tap higher margins per each item listed on its platform.
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