E-commerce continues to be a huge focus for investors watching consumer behavior and spending patterns in the wake of the Covid-19 pandemic. In the latest development, UK startup Lyst, a portal for high fashion brands and stores to sell directly to users, has picked up $85 million, in what the startup is describing as a ‘pre-IPO’ round.
The news comes as the company says that it has now grown to 150 million users browsing and buying from a catalog of 8 million products from 17,000 brands and retailers.
List said that gross merchandise value in 2020 was over $500 million, with new user numbers growing 1100%. GMV has definitely been accelerating. Lyst has been around since 2010 and said today that lifetime GMV is more than $2 billion.
“Lyst is rapidly becoming a fashion category leader, which hundreds of millions of fashion lovers rely on to decide what to buy. While our app and website already enjoy very large audiences in the USA & Europe, fashion e-commerce remains under-penetrated in general, with huge growth potential globally. We’re excited to use this raise from top-tier investors to continue personalising the fashion shopping experience to each of our millions of customers, while helping our partner brands thrive,” said Chris Morton, Lyst’s CEO and founder, in a statement.
We have contacted the company to ask about the timing and location for a public listing and while it has not commented, we understand that London or New York would be the most obvious locations for a listing, which is not likely to be for another year or even three.
For now, Lyst has disclosed that investors in this latest injection include funds managed by Fidelity International, Novator Capital, Giano Capital and C4 Ventures, as well as a mix of financial and strategic previous backers Draper Esprit, 14W, Accel, Balderton Capital, Venrex and LVMH. Carmen Busquets — a strategic advisor to the company who co-founded Net-a-Porter, one of Lyst’s competitors in the space — also increased her investment in the company with this round, the company said.
Sources say the valuation is close to $700 million with this round, although the company is not confirming anything. (Also, with this the sources also say that PitchBook’s estimate of $500 million post-money is way off.) Sky News, where the funding news was leaked last night, did not have a valuation figure.
For some further comparison and context, though, Farfetch, another competitor in the same space as Lyst, listed publicly some years ago and currently has a market cap of $14.4 billion. And more generally, there is a lot to play for here online, not just against other pure-play fashion portals, but also standalone retailers, marketplaces like Amazon, and increasingly social media apps like Instagram, TikTok and Snapchat, which are all looking at how they can better capitalize on the fact that their platforms are already being used quite aggressively and widely for social commerce.
Social media sites would be an ironic but perhaps very unsurprising competitor for Lyst, which started life as a pioneer in the concept, creating a way for people to follow influential high fashion brands and influencers on its platform — who were not actually called “influencers” at the time, but curators and bloggers (the more things change, eh?) — and get alerts when tagged or in-demand items would be posted by labels or retailers for sale.
People might have originally been very skeptical about how well high fashion (read: expensive, sometimes esoteric) items might play over screens. Surely expensive has to equate to high-touch sales in lovely boutiques? But, over time, Lyst and the others in the same area have proved it all out in spades. And Lyst itself has raised successive rounds over time to back up its premise. Balenciaga, Balmain, Bottega Veneta, Burberry, Fendi, Gucci, Moncler, Off-White, Prada, Saint Laurent and Valentino are among the brands that appear on its platform today.
Over the years, more variations and competitors have presented themselves, but the salient fact remains that high fashion has a huge target audience if delivered in the right way, and that is something that investors, brands, influencers, and these marketplaces themselves have all doubled down on in the pandemic.
Consumers, too. It’s been a time when people who have luckily not found themselves outright struggling financially — and there are those, too, unfortunately — have instead discovered they more disposable income than usual, since going out to restaurants, travelling and other expenses have gone out the door, so to speak.
In contrast, fashion and overall buying more goods for ourselves have become a form of escapism. And for those who get a lift out of the tree falling in the forest and being there to hear the sound, we can still put on the outfits, snap ourselves for our Stories, and exposure will still be ours.
“Lyst has made huge progress over the past year with its industry leading app for the fast- growing online luxury fashion market – a trend which looks set to continue as consumers retain their newfound digital habits, and demand for fashion rises further post-pandemic. In recent years we have seen other high-growth fashion tech businesses taking the next step, and we believe Lyst is well positioned to capitalise on this market momentum. Draper Esprit has backed Lyst since Series A and we believe this latest round sets the business up for an exciting next phase,” said Nicola McClafferty, a partner, Draper Esprit, in a statement.
Lyst also announced a few appointments to firm up its executive bench in the lead-up to its next steps as a company. Mateo Rando previously at Spotify, is joining as chief product officer to focus largely on Lyst’s popular mobile app. And Emma McFerran, formerly general counsel and chief people officer, is stepping up as COO and a new board member.
Updated with more information about the valuation. Additional reporting: Mike Butcher
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