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Is this 'Rent Now' button the hot new fashion?

Loanhood is giving independent brands new opportunities

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Today’s startup has hit on a compelling way to help grow the circular economy in fashion, while helping independent brands get their clothes seen in more places.

Today, meet Loanhood.

But first:

  • Lemon, which we profiled last October, has today announced a £500,000 pre-seed round led by SFC Capital and Pitchdrive. That’s hot on the heels of launching its SaaS management product earlier this week.

  • Check all the latest deals, product updates, and more for the startups we’ve covered on PreSeed Now in our Startup Tracker.

– Martin

PS: As someone who loves a good pun and likes the Kinks, I tried to get ‘dedicated borrowers of fashion’ into today’s article, but it didn’t fit anywhere… so there it is.

This issue of PreSeed Now is brought to you by EHE Ventures.

Known for backing high-growth tech, EHE just announced they're building a £15m AI tech fund, and have finalised their core Fund Advisory team. The fund itself seeks to support and accelerate the growth of AI technologies, empowering the brightest minds in tech at pre-seed, seed and Series A.

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Loanhood wants to power a fashion rental revolution for indie brands

Loanhood co-founders Lucy Hall and Jade McSorley

In summary:

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How consumers think about clothes has started to change in recent years. Renting, rather than buying, them has started to seem like an appealing prospect.

Moss Bros has been renting out suits on the high street for decades, but names like Rent the Runway, Nuuly, Hurr, and By Rotation have emerged more recently, offering rentals either of high-price designerwear or more accessibly priced clothing.

They’re tapping into a market of consumers looking to shun the fast fashion industry, save money, or just be kinder to the planet.

Meanwhile, the likes of Depop and Vinted show how consumers are happy to get away from the idea of holding onto clothes, and can happily sell them on to someone else when they don’t need them anymore.

Bit by bit, the ‘circular economy’ is becoming more of a concrete thing.

The ‘Rent Now’ button

Bringing a fresh take on to clothing rental is Loanhood, which wants to help Gen-Z focused independent occasionwear fashion brands embrace rental.

They do this through the ‘rent now’ button they’ve developed for ecommerce websites.

An example of Loanhood’s ‘Rent Now’ button

“Independent fashion brands make up 90% of the fashion industry. We’re empowering them through our rent now button, which embeds into ecommerce sites so they can own that rental journey and rent directly to their customers,” says CEO and co-founder Lucy Hall.

The startup currently targets online fashion brands, usually with between one and nine employees. These companies don’t have the resources to develop rental offerings themselves.

The button works with popular ecommerce platforms like Shopify, Squarespace, and Wix, adding a ‘Rent Now’ button to items the seller wishes to offer for rental. 

You can see an example of how it works on the website of London-based brand Wild Swans, which has a dedicated rental section powered by Loanhood. Customers can pick the garment size and rental period from a popup after they click the button.

Loanhood’s integration on the Wild Swans website

One thing to note is that Loanhood handles none of the logistics. That’s between the brand and the customer. This keeps things simple for the startup, and means they can focus on scaling their core product. 

Brands can offer delivery and returns by mail if they choose, or in-store pickups and returns, which are certainly more in line with the environmentally minded ethos of the circular economy.

Hall says that once someone rents, they’ll be more inclined to rent again.

“It's just really getting people over that first kind of hurdle into rental, that new behaviour. 

“Trying something new is always a bit daunting. ‘What's going to happen if I damage it?’ So we have damage protection. ‘What if I send it back late?’ All these different questions. We're trying to alleviate those pain points for people.”

Loanhood doesn’t charge brands anything upfront, instead taking a cut from every rental fee that goes through the system

The story so far

Hall has a background in fashion. She started her career on the PR side before becoming part of the founding team of a model agency. That’s where she met her Loanhood co-founder Jade McSorley.

But Hall became disillusioned with the consumption culture of the fashion world, and so she took a sharp turn in her career and opened a ‘farm to fork’ restaurant in Covent Garden, called Jar Kitchen.

“That's where sustainability really embedded itself in me. Eating locally and seasonally and organically is better for people and the planet, but there isn't that connection there in fashion. And it really gave me a taste of running my own business in a very fast paced industry.”

After selling the restaurant, she returned to fashion in 2019. McSorley came to her with the idea for Loanhood off the back of a Masters’ degree she’d been studying for at the London College of Fashion.

“The fashion industry already has ‘circular shared wardrobes’ for PR rentals for celebrities or for shoots. Why couldn’t we democratise that and bring it to the masses?,” Hall says.

The first idea Loanhood explored was a peer-to-peer rental marketplace. Progress on the idea was temporarily halted by the pandemic lockdowns, but come 2021 the pair were back at it.

They held in-person clothes swap events to understand how a peer-to-peer model would work. Hall says London borough councils and private clients still pay them for these events now.

One of Loanhood’s events. Photo provided by the startup.

Loanhood has partnered with recognisable retail names like Selfridges, which ran in-store Loanhood clothes swaps in Manchester, Birmingham, and London.

Hall said that this created brand credibility for the startup, while helping them prove the market.

“Swapping is generally associated with lower priced items. We were able to show that people would do it at a high price point as well,” she says.

On the tech side, Hall and McSorley jumped straight in by developing an app.

While Hall admits that testing the idea with a website before paying to have an app built would have been a better idea (startups are a learning journey!), the app launched in summer 2022.

She says the peer-to-peer app has so far attracted around 5,500 users, but the real opportunity for Loanhood is with the rental button, which was developed after brands started asking them for it.

Hall says 20 brands are currently using the button on their websites, and this product is now the startup’s main focus, while the app-based marketplace keeps running.

“Products that are available with the Rent Now button can also be featured in the app. It's extra eyes for those brands. 

“We see a future where the marketplace app and the widget come together and we have this kind of ‘OpenTable of rental’. But for now we’re focusing on the button.”

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