The operator of an online consignment marketplace provides full-service authentication and merchandising services for luxury goods with a comparatively high take rate, averaging about 35%. Its competitors, such as eBay Authenticate and Poshmark, take around 20% in commissions for similar services. The appeal of The RealReal, therefore, lies in its claim to completely authenticate any merchandise sold through its website.
However, the emphasis on premium offerings and commitment to authenticity has not prevented claims of fraud and the filing of various lawsuits. Chanel filed suit in 2018 alleging the site sold at least seven counterfeit handbags, in addition to claiming The RealReal violated Chanel's stated authority in being the exclusive authenticator of its own branded products. This followed a 2017 lawsuit by a Michigan-based customer alleging The RealReal substantially inflated weight details of gemstones, among other misrepresentations. The 2017 lawsuit was settled in 2018; Chanel's remains ongoing. The RealReal has denied all accusations.
Speaking to its successes, however, is its recently acquired status as a fully fledged unicorn. Here's a look at The RealReal's fundraising and valuation history, per PitchBook data:
June 2012: $7.5M round | $17M valuation
April 2013: $14M | $56M
May 2014: $20M | $150M
April 2015: $40M | $240M
June 2016: $40M | $300M
June 2017: $50M | $450M
July 2018: $115M | $745M
March 2019: $50M | $1.0B
Fashion joins biotechWhile it may have been the most high-profile, The RealReal wasn't the only VC-backed company getting newly minted public status in what's been a busy quarter for successful debuts. Here's a look at three biotech companies Wall Street welcomed this week:
Adaptive TechnologiesOpening to a strong pop on Thursday was biotech-focused software developer Adaptive Technologies, which rose over 100% from its $20 IPO price to reach a first-day close of $40.30. The company offered 15 million shares, up from the 12.5 million previously expected, raising $300 million in the process. Founded in 2009, the Seattle-based company was valued at $1.1 billion with a $195 million Series F in 2015. Its IPO share price gave the business an initial market cap of $2.4 billion.
Adaptive Technologies may have a particularly strong advantage thanks to its focus on software development to help analyze and diagnose blood tests. Further, the company previously yielded a $45 million private investment from Microsoft, as Adaptive has pledged to sink at least $12 million into the tech giant's Azure infrastructure over the next seven years. This insulation from the intense speculation of make-or-break FDA-regulated drug pipelines may be viewed as its main appeal for biotech investors often burned by failed clinical trials.
Morphic TherapeuticsBoston-area Morphic Therapeutic (aka Morphic Holding) debuted on the NASDAQ on Thursday under the symbol MORF. The company pulled in $90 million after offering 6 million shares at $15 apiece, ultimately closing its first trading day at $18. Founded in 2014, the biotech company raised an $80 million Series B last September. At the time, CEO Praveen Tipirneni reportedly denied any plans for an IPO.
Morphic's focus is on orally administered integrin drugs. The company is currently early in its drug development pipeline, with the submission of two investigational new drug (IND) applications expected within a year. In 2018, Morphic struck a collaboration deal with AbbVie to study fibrotic diseases and this year struck a deal with Jannsen involving undisclosed research programs.
Karuna TherapeuticsKaruna Therapeutics, also based in Boston, debuted Friday, offering about 5.58 million shares at $16 apiece, which gave it an initial market cap of around $342 million. Karuna was valued at $240 million in April with an $80 million Series B, led by ARCH Venture Partners. Friday’s trading saw the stock close up 25% with around 2.7 million shares traded, including after-hours transactions.
Founded in 2009, the biotech company is developing drugs to treat neuropsychiatric conditions, such as Alzheimer's disease and schizophrenia. Its lead candidate, KarXT, expects topline Phase 2 results later this year with respect to its treatment of psychosis caused by schizophrenia; other applications of the drug are still in Phase 1 trials.
Featured image courtesy of The RealReal