"Covid-19 took every last little breath of wind out of our sails," says Designer Wardrobe chief executive Ruby Morgan.
Her fashion website was travelling well in December, when it raised $1.9 million, mostly from its existing backers, who include its chairman Simon Moutter and director Shane Bradley.
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Designer Wardrobe, or DW, has two lines to its business: a peer-to-peer marketplace for selling or renting second-hand clothes (its original line), and renting high-end garments for events.
The funds were mostly pegged to buy inventory for the rental side of Designer Wardrobe's business, which extends to three brick-and-mortar stores (two in Auckland and one in Christchurch).
But then came Covid.
"We had our first school ball cancellation in early March," Morgan says. Another quickly followed. The CEO saw the writing on the wall. "We had become quite school ball dependent," she says. But it rapidly became obvious that a bleak winter of cancelled events would becalm Designer Wardrobe's rental business.
Instead, the company decided to refocus on its second-hand marketplace with a launch into Australia, which has just kicked off over the past few days as postal and courier services return to something like normal across the Tasman.
Morgan says DW, founded in 2015, has close to 200,000 members now.
It's always been pitched as planet-friendly, at a time when Instagram demands a new outfit for every occasion.
"Rental is a hugely growing industry worldwide as people become more environmentally conscious," Morgan says. The world is trending away from possessions and ownership towards a more sustainable, experience-focused lifestyle."
Now, DW also fits with an era of tighter spending.
The privately held business does not release detailed financials, but Morgan says its run rate is in the single-digit millions and growing solidly. "We expect to hit profitability early in the next financial year."
Pre-pandemic, the second-hand marketplace and rental businesses were contributing about 50 per cent of revenue each.
In normal times, the marketplace generates between $100,000 to $150,000 a week, with Designer Wardrobe taking a 10 to 15 per cent clip on the ticket, Morgan says.
The rental business was doing about 500 bookings a week before Covid all but wiped it out, and at the start of level 4, the second-hand marketplace was not deemed essential.
DW claimed $189,621 on the wage subsidy scheme.
"But rather than cry ourselves to sleep, we quickly pivoted our focus to Marketplace and in particular the Australian launch," Morgan says.
Locally, DW's marketplace went off its socks on the first day of level 3, recording two-and-a-half times the sales of its previous record day.
It's way too early to assess the success of the Aussie foray - the company's second stab at the Lucky Country - but Morgan sees Designer Wardrobe in a unique niche.
"There are existing fashion marketplaces in both Australia and New Zealand but no Australian or New Zealand-owned competitors that offer the seamless transtasman experience that we do," she says.
"The big players in Australia, Depop (UK-owned) and Vestiaire Collective (French-owned) service the thrift/vintage and luxury markets respectively where Designer Wardrobe sits in the middle offering great High Street labels as well as less expensive designer items."
And while the rental market has been thumped by the outbreak, pandemic downtime has seen many people cleaning out their wardrobes, Morgan says. There's no shortage of second-hand inventory.
But why should they list their duds on Designer Wardrobe rather than, say, Facebook Marketplace or Trade Me (where Morgan once worked with her older siblings, Sam and Jessi)?
Morgan points to her site's escrow service. Funds aren't released until a buyer is happy with their purchase.
"We are a purely fashion-focused site and provide a much more escorted process, including buyer protection for goods that aren't delivered or as described. So it's a much more hands-on, user-focused experience than Trade Me," she says.
"We also have a sell-through rate of more than five times that of Trade Me's last reported figure, as well as a higher average sale price."
There's a brand new talk, but it's not very clear
Some of Designer Wardrobe's backers - who include Shane Bradley, Sir Stephen Tindall and Aaron Bhatnagar - are serial investors in start-ups.
But former Spark boss Moutter is a less familiar face on the angel investment scene and, with his Blackadder haircuts, perhaps not someone every reader would immediately associate with the fashion industry.
How did he fall into Designer Wardrobe?
"I got involved with DW when the founders Donielle Brooke and Aidan Bartlett were seeking to raise their first meaningful seed capital around four years ago," Moutter says.
The pair were graduating from The Icehouse incubator at the time.
"My wife, Sophie, and I were contemplating setting up a similar business to solve the problem of what to do with a wardrobe full of designer branded clothing that isn't being worn very often," Moutter explains.
"We thought there was room for a specific marketplace targeting fashion-conscious women and enabling them to trade and share their designer clothing in a highly curated and managed way. I stumbled across DW when I heard a radio advert on NewstalkZB promoting an Icehouse Lightning Lab showcase event."
Lightning Lab events - in this case featuring DW in the line-up - see start-ups taking the stage to pitch to an audience of potential investors, Dragon's Den style.
"When I rang Shane Bradley, an acquaintance at the time, to gain his perspective given his success as a serial internet entrepreneur, he liked the concept and surprised me by saying 'If you invest, count me in,'" Moutter says.
"So Shane and I became the co-lead investors and we have taken the company through multiple funding rounds and together steered the management team to build the business into what it is today - the leading marketplace for buying and selling used designer fashion and the market leader in designer rental.
"It's been a bumpy journey, as is the case with most start-ups - we nearly collapsed a couple of years ago and we've had to pivot our strategy a few times to find the right customer proposition."
Morgan - who worked as a business analyst for The Warehouse and as COO of Goodnest after leaving Trade Me - joined as chief executive in January last year.
"Her internet business experience and acumen have made a big difference to the growth and performance of the business," Moutter says.
"I've loved working with the young management team and genuinely believe the combination of their passion, creativity and hard work with Shane, and my business experience and ability to attract capital, has been critical to the success of DW."