The big news coming out of the finance world this March was not that Levi’s took its iconic denim brand public or even that Apple is set to launch a credit card this summer.
Instead, it was that two female-led startups, Glossier and Rent the Runway, officially reached “unicorn” status—and did so just two days apart. Glossier, the direct-to-consumer beauty company helmed by Emily Weiss, reached a $1.2 billion valuation. And clothing- and accessory-rental service Rent the Runway, which CEO Jennifer Hyman co-founded in 2008, came in at precisely $1 billion.
The next generation of unicorn startups is here—and an increasing number of them, like Glossier and Rent the Runway, are being led by women in a market that’s largely built by and for men (particularly white, heterosexual, cisgender, able-bodied ones).
“For those investors still living in the dark ages, perhaps the billion-dollar announcements from Glossier and [Rent the Runway] this week are another wake-up call about the potential of women-led and women-focused businesses,” tweeted Jason Del Rey, senior editor of commerce at technology news website Recode, following the Rent the Runway announcement.
The entrepreneurial landscape has changed since 2013, when venture capitalist Aileen Lee coined the term “unicorn” to describe a privately held startup valued at more than $1 billion. Last year set a new record for global venture-capital funding, with the emergence of 40 new unicorns in the U.S. alone. But their statistical rarity means their mythical moniker still holds true, particularly if the person helming the company is a woman.
Disrupting their way toward unicorn status
Glossier and Rent the Runway are just two of the many female-led startups disrupting dusty and archaic yet financially lucrative industries.
In May, wedding-planning startup Zola raised $100 million—the fourth-largest round of funding brought in by a female founder in 2018—in a deal that valued the company at about $600 million. Since launching as an online registry service in 2013, Zola has added services and product lines like wedding websites and paper goods.
CEO and co-founder Shan-Lyn Ma wants to expand even further to become the leading brand name in what is a reportedly $100 billion market. Ma said it still takes, on average, 20 apps or services to plan one wedding, but Zola, a WeWork member company at Montreal’s WeWork L’Avenue, aims to make it possible to plan the entire event in one place.
“Couples getting married today are unlike any previous generation,” said Ma during a recent event at WeWork Now in New York City. “What that means when it comes to wedding planning is that they require modern tools and technology, and they expect more from wedding-planning services.”
Before Glossier’s most recent $100 million Series D round in 2018, the beauty brand was valued at $390 million, so it’s perhaps worth noting that its 2018 valuation is more than $200 million shy of where Zola is currently.
Direct-to-consumer luggage startup Away also raised $50 million in Series C funding last June and now counts a valuation of roughly $700 million. Co-founders Jen Rubio and Steph Korey, who met in 2011 as early employees at Warby Parker, started the company in 2016 when looking to do for luggage what Warby Parker did for glasses. So far, so good: Away turned profitable just a year after its launch.
Outdoor Voices, founded in 2013, has had a similarly explosive trajectory. Founder and CEO Tyler Haney built the $100 million activewear brand around high-performance basics that are as functional for professional athletes as they are for “recreationalists,” a favorite term of the company. Today, retail industry veteran Mickey Drexler sits on its board; in February, Pam Catlett, a former Nike and Under Armour executive, joined the company as president and COO.
Upending the status quo
But even for well-heeled female-led startups like Outdoor Voices, fundraising is a unique challenge. In the beginning, Haney took “every meeting [she] possibly could,” she told Forbes in 2017. She recalled some investors being in disbelief at “this young girl who says she wants to go up against Kevin Plank [of Under Armour].”
When Rent the Runway co-founders Jennifer Fleiss and Jennifer Hyman began fundraising in 2009, the pair found it difficult to articulate the more-intangible elements of what they were pitching.
“Men couldn’t grasp the emotional connection that women have with fashion,” said Fleiss (who left Rent the Runway in 2017 and is now co-founder at personal-shopping service Jetblack) during a recent Female Founders Day panel in New York. “It’s not about the cost, or the convenience, or why we are crazy enough to need hundreds of items in our closet on a regular basis. It’s about this emotional feeling where you feel like you can take on the world when you put on something great.” In fact, entrepreneurs contend that the right clothes actually help them “demand respect.” (In October, WeWork and Rent the Runway partnered on a series of collaborations, the first of which includes a network of Rent the Runway drop-offs at 15 WeWork locations across six cities nationwide.)
Would Fleiss and Hyman have fared any differently had there been more women in the meeting room? It certainly wouldn’t have hurt, especially given how starkly male-heavy venture capital is. In 2019, just 9.65 percent of decision-makers at venture-capital firms are women, up from 5.70 percent in 2016, according to Crunchbase. It’s perhaps no surprise then that just 2.5 percent of all venture capital-backed startups are founded by women.
“One of the things that will have the biggest impact is having more female investors, whether it’s female angel investors or just seeing more women within VC firms,” said Ma, who says she honed in on the basics during Zola’s early pitches: the idea, her team, the potential of the wedding market, and other key points.
More recently, Ma has been proposing a financial roadmap that would allow the company to both sustain its growth and accelerate it even further.
“We focus on how we can anticipate the questions investors have in their minds and show them without a doubt that Zola is a great investment opportunity, because we know it is,” said Ma. “We are clearly on the path to being the No. 1 wedding company in the country.”
So is the future of unicorn startups female? Ma is optimistic, but there’s a long road ahead—albeit one that’s paved with Glossier’s no-makeup makeup, Outdoor Voices’ color-blocked leggings, and Away’s rollaboard suitcases.
“I’m very encouraged by the number of female founders I see starting companies,” said Ma. “The more women who are giving it a go, the closer we can get to a 50/50 representation of the population.”
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