NEW DELHI: Rent It Bae has acquired peer fashion rental services startup Flyrobe to consolidate operations, ramp up its omnichannel footprint and tap the overseas market.
AARK World Pvt Ltd., which owns and operates Rent It Bae, said both businesses are being merged and will operate under the brand Flyrobe. The alliance that was stitched up last week is expected to be announced in the next few days.
“The recent deal between the two startups is part cash and part stock. The new combined business is being valued at Rs 60 crore,” Aanchal Saini, former CEO of Rent It Bae and the new CEO of Flyrobe, told ET. “While our approach to the business remains omnichannel, from our experience with offline stores we find a huge potential… We’re looking at tying up with franchise stores in around 30 different cities across India with local partners who have deep knowledge about their respective markets.”
Co-founded by three Indian Institute of Technology Mumbai alumni in September 2015, Flyrobe had been funded by Sequoia Capital, IDG Ventures (now Chiratae Ventures) and Tokyo-based GREE Ventures (now STRIVE), having received $10 million in two rounds. In the latest round last year, Flyrobe raised Rs 26 crore from existing shareholders at a Rs 150 crore valuation after early-stage funding from Vijay Shekhar Sharma, Sandeep Tandon, Kunal Shah, Zishaan Hayath, Rohit Bansal, Kunal Bahl and Abhishek Jain in individual capacity.
To support the acquisition, New Delhi-based AARK World said it raised funds from existing investor GEMS Partners, a micro VC fund, and is poised to launch a larger Series A round of $3 million. GREE Ventures (STRIVE) remains invested in the merged company.
“We’re targeting putting the business back on growth trajectory, steering it towards profitability in the next 12 months,” said Pranay Surana, chief strategy officer of Flyrobe.
The company hopes to cash in on the AI-enabled fashion rental store technology and virtual trial room launched this year by Rent It Bae and plans to integrate the virtual trial experience in all brand stores and Flyrobe’s apps by the next quarter under the brand Tryrobe.
Nikhil Kapur, partner, GREE Ventures (STRIVE), which is one of Flyrobe’s investors, feels that after very successfully educating the Indian customers about the online clothes rental experience, the combined entity will now have to focus on creating an offline and asset-light footprint. “After investing a lot of cash in building inventory and running their own branded stores now the focus for Flyrobe will be on the franchisee model to launch offline stores without adding inventory over the next 12 months,” he said.
Flyrobe claims that it has facilitated the largest marketplace for customer-to-customer renting (inventory curated from individual closets) with more than 1,800 curators onboard. The company has five physical brand stores and plans to launch 10 franchise stores in the next 12 months.
“For our overseas expansion to Dubai and London, we’re looking at the huge ethnic Indian market around festivals and weddings,” added Aditya Gupta, MD, GEMS Partners.
Growing at a CAGR of 10.6% year-on-year, the Indian fashion rental market is touching Rs 12,000 crore, as per analyst estimates, with new companies such as Stage 3, Liberent and Rent A Closet helping it to expand.
“With rising penetration of internet, increasing ease of use of online shopping, and increasing allure of millennials towards high-end fashion clothing without owning expensive assets, there is lot of growth potential in this segment. Ethnic clothing and accessories on rental, especially for weddings and religious functions, are a big growth area,” said Sanjay Arora, business director of consultancy firm Wazir Advisors.