The shakeout in the online used-clothing industry is here, and ThredUp is looking to separate from the pack.
The San Francisco-based shopping site, which sells secondhand clothing for women and children, has raised an $81 million investment led by Goldman Sachs Investment Partners that a source says values the company at around $500 million. The investment appears to be the largest to date in a company specializing in the sale of secondhand clothing. CEO James Reinhart declined to comment on the valuation and whether any of the funds would be used to buy shares from early investors or employees. The company has now raised more than $125 million in total from investors including Upfront Ventures, Trinity Ventures, Highland Capital Partners and Redpoint Ventures.
Reinhart said in an email that the new money would be used in part to add at least two warehouses to its current two and to start advertising more aggressively. “[R]ight now we have the best business nobody’s ever heard of,” he said.
ThredUp is one of a host of startups trying to bring the idea of secondhand shopping online while making it more mainstream. The company says that more than a third of its customers have a household income north of $100,000.
“While most brand-oriented consumers have historically held a negative bias toward purchasing secondhand clothing, ThredUp is proving it can reverse that perception,” said Ian Friedman, co-head of GSIP Private Investments and new ThredUp board member, in a statement. “We found that over half of their customers had not purchased pre-owned clothing in the year prior to becoming a ThredUp.”
The funding comes as the crowd of startups targeting the space is thinning out. Direct competitor Twice recently sold to eBay in what a source previously said was mostly an “acqhire,” while peer-to-peer secondhand marketplace Shop Hers was recently in talks to sell to Tradesy, a well-funded competitor whose customers sell used clothes directly to one another. Other companies in the space include Poshmark, Threadflip and The RealReal, which anticipates revenue of more than $200 million this year by targeting the luxury end of the market.
To sell on ThredUp, customers fill a bag the company supplies with used clothes that are still in excellent condition. ThredUp’s sweet spot is mainstream brands like J. Crew and Calvin Klein. The company inspects the clothing and lists about fifty percent of it for sale on their site. Sellers get their money immediately if they take it in the form of a ThredUp credit, but have to wait 14 days if they want cash via PayPal. Like any retailer, ThredUp essentially buys from sellers at wholesale prices and then marks up prices to sell on its site. But since the items are used, ThredUp’s retail prices are well below what a shopper would find in a retail store.
This article originally appeared on Recode.net.