Dubai-based online marketplace The Luxury Closet has raised $14 million to expand its operations globally as the coronavirus pandemic spurs a surge in online sales and demand for recycled fashion.
The latest funding round was led by GMP Investments, the company said on Sunday. Other backers include Dubai’s HB Investments, Saudi Arabia’s Nazer Group, Middle East Venture Partners and MLM Investment Company.
Set up in 2012, The Luxury Closet resells luxury goods in 85 countries on its platform.
“The capital raised will accelerate The Luxury Closet’s already robust global growth, with the company set to magnify its presence in markets outside the UAE and execute on a clear strategy ... within the international high-end luxury resale market,” the company said.
Online shopping became more popular after governments around the world introduced movement restrictions to stop the spread of the Covid-19 pandemic.
Retail companies beefed up their digital operations and realigned their businesses after the onset the pandemic.
E-commerce sales are set to triple in the Mena region to $28.5 billion in 2022, from $8.3bn in 2017, according to research by Bain & Company and Google.
“Resale is the future of shopping. We expect one in six transactions to be pre-owned by the end of the decade,” said Kunal Kapoor, chief executive and founder of The Luxury Closet.
“This marks a paradigm shift in consumer choice and the value chain of the fashion and retail industry. What we are excited about most is leading the industry to a more sustainable and environmentally friendly future”.
Venture capital firm Middle East Venture Partners, which focuses on early-stage Middle East start-ups, has backed The Luxury Closet in each successive funding round.
“Being eco-friendly is so important to us as family and an organisation, and The Luxury Closet advocates that by recycling luxury fashion,” said Mona Kattan, president of HB Investments.
“Having a platform that allows us to resell and buy luxurious items at an affordable cost is so meaningful to us because it opens up the accessibility to more people and also reduces the incentive to buy counterfeits."
Awad Capital, a Dubai Financial Services Authority-regulated company, acted as a financial adviser to the company in securing the funds. Drake Star Partners, a global technology focused investment bank, also supported the company in the transaction.
Start-ups in the Mena region secured $1.03bn in funding last year, 13 per cent more than in 2019, according to data platform Magnitt.
