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Sneaker Startup GOAT is the GOAT at Raising Venture Capital

$198M and counting

“Money Makers” is a new monthly series from ONE37pm that gives you a snapshot of the latest startup to raise an obscene amount of capital—and a glimpse at what it plans to do with the cash. Up this month is L.A.-based sneaker resale startup GOAT, which raised $100M from Foot Locker last week, after a $60M raise in 2018 through a merger with Flight Club. In short, it was quite the flip.

The Startup

Sneaker marketplace GOAT was founded in 2015 by serial entrepreneurs/sneaker enthusiastsEddy Lu and Daishin Sugano. In February 2018, GOAT merged with fellow sneaker reseller Flight Club, which was founded in 2005 and specializes in brick-and-mortar reselling. The two companies still operate as independent brands today, but they share technology, resources and information behind the scenes through their new parent company, GOAT Group.

What They Do Better

GOAT offers a slicker, more elevated shopping experience than many of its competitors, which include StockX, Stadium Goods and eBay. It also takes extra steps to ensure authenticity by personally inspecting every single pair of sneakers offered for sale and requiring all sellers to be verified. In essence, the company has elevated and added security to the reselling process. The sneakers are even painstakingly cleaned before being shipped out to buyers.

Latest Raise

As Forbes reported, Foot Locker’s $100M investment in GOAT Group, announced on February 7, is the largest investment the retailer has ever made. GOAT’s valuation more than doubled thanks to the raise, taking it from $250M to $550M.

Total Raise

GOAT Group raised $60M from Index Ventures and other firms in February 2018 through its merger with Flight Club. Today the company has raised a total of $197.6M, according to CrunchBase.

Wait, Is That a Lot?

Yes and no. GOAT beats out many of its competitors with this raise, including StockX and Grailed, but it isn’t alone here. The RealReal leads the re-commerce pack, having raised $288M in July 2018. Meanwhile, Stadium Goods was acquired by Farfetch in December 2018 for $250M.

How They’ll Spend It

GOAT is keen to strengthen its buying and selling experience outside of the U.S. by defaulting to local currencies and languages, among other enhancements. Brick-and-mortar experimentation also seems likely, which is where Foot Locker and, to a much lesser degree, Flight Club both have intelligence and resources. Foot Locker, for its part, will use GOAT’s digital savvy to reposition the brand for a younger, more digitally focused generation of sneaker fans.

What the Optimists Say

While sneaker trends come and go, passion for the category is likely to remain relatively constant as long as brands continue to innovate and release hyped, limited-edition styles like they have for decades.

 

The sneaker resale market, worth an estimated $2B, is also part of a growing trend toward consumers “upcycling” unwanted items and attempting to turn a profit in the process. An example of this: In May 2018, Poshmark announced that its sellers have earned more than $1B since the company launched in 2011.

What the Skeptics Say

Some journalists point to the athleisure bubble as a potential warning against overzealous investment in the sneaker and streetwear industries.

 

Others point out that, unlike sites like Grailed, The RealReal and StockX, GOAT is somewhat pigeonholed with its singular focus on sneakers. Only time will tell…

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