As the tech world eagerly awaits the IPO of online clothes seller Stitch Fix, another ecommerce startup in fashion has secured its own large funding round to expand its business outside of the U.S.
Poshmark, which provides a marketplace for people to buy, sell and share their clothes, raised $87.5 million in a Series D round led by Temasak, the company said on Tuesday. Existing investors including Mayfield, Menlo Ventures and GGV participated in the investment, which brings Poshmark’s funding to date to close to $160 million. While Poshmark would not provide terms of the deal, startup tracker PitchBook estimated that Poshmark is worth $625 million after the funding; the company said such a number was “not too far from the truth.”
According to CEO Manish Chandra, Poshmark’s three million or so stylists — many of them everyday people, but increasingly boutiques and small business as well — curate about eight million items on the platform each day, with about 150,000 new items added to the site’s combined inventory. The company plans to use the new investment to improve its technical platform, including investing in artificial intelligence, as well as to partner with more large-sized brands and expand its business into international markets. Temasek, the lead investor in the round, is based in Singapore and has expertise with Asian markets, Chandra says.
Poshmark also unveiled a voice-enabled tool with the news, called Poshmark Stylist Match, that works with Amazon Alexa. Users can ask Alexa for specific themed looks, then receive matches from top stylists to look through in the app, which provides different personalized experiences each time a user opens it, according to Chandra.
The funding could be one of the last financing rounds Poshmark takes before looking to follow Stitch Fix into the public markets. In April, TechCrunch reported that the company was on pace to double revenue to $100 million in 2017 and was cash flow positive at that time. The company declined to comment on that report.
But investor Navin Chaddha, who led the company’s Series A funding in 2011, says that Poshmark is on a growth trajectory similar to another of his fund Mayfield’s portfolio companies, Lyft. Both companies have two-sided marketplaces and loyal user cohorts, says Chaddha, redefining an “essential behavior” through mobile technology. Chandra, who co-founded Poshmark in 2011, says he spent the fall of 2010 living for six months without touching a computer and performing all his work and personal computing tasks on a phone to prove the form factor’s utility.
Poshmark has weathered difficulties in the past including growing pains in 2013, when the company grew sales nearly 10x in the first half of the year and couldn’t keep up on the infrastructure side. Chandra had to “pretty dramatically” slow down growth for the next six months to catch up.
Today, Poshmark’s CEO believes it’s on a winning track even as competitors struggle (at least one shut down last year) and companies such as Stitch Fix, which don’t work with used clothes or depend on individual sellers, have soared past it in sales and public recognition. The average active users spends more than 20 minutes on the platform each day, says Chandra, more than most social platforms not named Facebook. The company more recently started growing its men’s category, he adds, and now works with retail and brand partnerships in addition to its original peer-to-peer business. More than 250,000 of its sellers are now boutique stores, he says.
Most important to the company’s success — and something it will have to get right in new markets outside the U.S. — is the social framework Poshmark has devised to keep its users coming back. Every user group by which the company breaks down its community has grown over the years, says Chandra, in large part due to the recognition and positive feedback active users receive when they share popular styles.
“Customers find everything through styling and curation,” Chandra says. “We have a philosophy that the platform is powered by love.”
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