Vinted has announced that it has closed an all-equity round of $303m funding led by EQT Growth, that values the company at $4.5bn post-money.
The circular economy where consumers themselves are both the suppliers and buyers of goods and services has come into its own in the last year of lockdown living as a popular and trusted way to buy and sell things. Now one of the larger players in that system the clothes and home goods marketplace Vinted is circling in on some very big money of its own.
The funding is being led by EQT Growth, with Accel, Burda Principal Investments, Insight Partners, Lightspeed Venture Partners, and Sprints Capital all previous backers also participating. This is a big jump for Vinted, which was valued at $1bn in its round at the end of 2019. That, of course, was just before the pandemic hit — a sign of how much the last year has positively impacted both Vinted and that business model as a whole.
It’s a huge deal for the company as well as the country that’s produced the startup. Founded out of Vilnius, Lithuania, in 2008, Vinted has operations across 13 markets — France, Germany, Belgium, Spain, Italy, the Netherlands, Austria, Poland, Czech Republic, Lithuania, Luxembourg, UK and the U.S. — and will be using the funding to double down on that while moving deeper into markets further afield, like its U.S. operation.
Altogether across that footprint, Vinted currently has some 45 million users (which is a neat number in this case: 45m=$4.5bn valuation), who upload their own items of clothes or home goods to sell or buy those uploaded by others. Users pay no fees for listing, but Vinted takes a “buyer protection” rate that 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), depending on the value of the good.
The circular economy is often thought of as a useful system that not only helps get more life out of things in a sustainable way, but gives people a better deal by cutting out some of the others from the retail chain. That’s been a very compelling concept in the last year, where people have been spending more time at home and looking to declutter those spaces, or out of work and looking to make extra money or save some money, or simply rethinking how the world is working and how we got to where we are today, and trying to do their small part in engaging with their communities in a different way.
It’s also one of the oldest and most primitive kinds of selling techniques. Pre-dating shopping malls and Amazon and the like, you could say being more circular is just in our bones.
However, in more direct, prosaic terms, we have also injected a lot of actual money into the circular economy concept.
Back in 2015, researchers estimated that the wider circular economy was a $4.5 trillion opportunity (this includes the many services as well as goods sold between people). Last November, it was estimated that fashion alone was a $5 trillion circular economy opportunity — a sign of just what an impact Covid-19 has had on the model. Some have even posited that the role of the circular economy might even help some of the most impacted communities pull themselves out from under the negative economic effects of this virus.
Vinted is not the only company that is capitalising on this. Wallapop, another second-hand swapping marketplace out of Spain, recently raised $191m. The question will be which of these circular economy players will, ironically, be the most sustainable in and of themselves. eBay, which was something of a circular economy pioneer online, has also seen a big boost in sales in the last year. However, last quarter it warned that some signs that its uplift might be fading.
Indeed, maybe in keeping with the practicality of what it has built — no use throwing out perfectly good things! — Vinted itself is very no-nonsense and does not talk up its business even when it appears to be going really well.
“The last 18 months have been challenging,” CEO Thomas Plantenga said flatly in an interview.
The company actually halted operations altogether for around the first two months of the pandemic hitting Europe, in order to figure out how to proceed with its marketplace while keeping people Covid-safe and not violating any rules imposed on activities in different markets.