When James Reinhart initially pitched his company ThredUp to venture capitalists, he was rejected 27 times.
ThredUp is a startup that lets customers sell clothes in their closets to others, but in 2008 when the company first started, the idea was different. Reinhart wanted to help people swap clothes with one another, particularly parents whose children were quickly growing out of their wardrobes. But it wasn’t a popular concept in Silicon Valley.
Reinhart tells Bloomberg Business’ Kim Bhasin that venture capitalists actually laughed or fell asleep at the table while he pitched them ThredUp. He remembers them staring at their Blackberries, waiting for the meetings to be over. But the Harvard Business School graduate says he wasn’t deterred.
“Often the number one reason why companies are successful at raising money is they find their right investor,” Reinhart tells Business Insider. “There are hundreds of great investors out there, I just needed to find the right one who believed in what I was doing.”
Despite the constant rejection, Reinhart had conviction in what he was building and financed ThredUp himself. Family and friends also gave him some money to get the business off the ground.
Fast-forward to 2015; Reinhart seems to have no problem raising money.
This year, ThredUp raised an $US81 million round of financing led by Goldman Sachs, bringing its total amount raised to more than $US131 million. Reinhart has also established a partnership with Target so customers of the retail giant can trade gently-used clothing for store credit.
Part of what Reinhart thinks helped ThredUp grow during those initial rough years was his easy-to-grasp business concept. ThredUp solved a problem many people have: overflowing closets full of unworn items.
Reinhart came up with the idea for ThredUp when he was a college student who was frustrated with his own wardrobe. He wondered what per cent of his clothing was actually worn, and what percentage was just sitting there. After polling friends, he realised about 70% of closets are made up of unworn clothing people would happily get rid of. The way we buy, wear and store clothing, Reinhart realised, is inefficient.
He made it ThredUp’s mission to manage that 70% of wasted closet real-estate. And after endlessly pitching his digital consignment shop to investors, Reinhart finally got others to buy what he was selling. In 2010, Reinhart met with Trinity Ventures. The partner finally told Reinhart what he’d been longing to hear: “I totally understand how ThredUp works.”
Now that Reinhart has mastered his startup’s pitch, he has some advice for other founders who are struggling to raise rounds from investors:
“Talk about how the world looks like today, and about what can make it ten times better,” he says.
Also, Reinhart recommends being persistent and having a thick skin.
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