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New York’s Fashion Startup Scene Is Having a Red Carpet Moment

Investors like the new breed of fashion companies that have an Instagram-fueled intimate relationship with their customers.

The brand’s Cloud Paint ranges in colors from Storm to Puff.

Source: Glossier

New York’s startup fashion scene is trending among venture capitalists. Record amounts of funding are being raised, leading to two freshly minted billion-dollar companies in the past two weeks. And there are more waiting in the wings, buoyed by the convergence of online shopping and Instagram.

Glossier Inc., a direct-to-consumer skincare and makeup startup, and Rent the Runway Inc., an online service for borrowing designer fashions and accessories, announced last month that they’ve hit unicorn status after recent funding rounds. Wedding-planning platform Zola Inc. and luxury designer website Moda Operandi Inc. are both currently valued at around $650 million, PitchBook data shows, well ahead of where others have been before a final injection of capital vaulted them across the billion-dollar line.

These new companies are more than just fashion and beauty startups, says Eurie Kim, a partner at Forerunner Ventures. They’re building revolutionary business models that are powered by intimate relationships with consumers. “This is why investors are clamoring to get involved -- and this is just the beginning,” Kim says.

The total venture capital investment in fashion and beauty tech startups in New York rose 30 percent last year to hit a record $612 million, according to data from PitchBook. So far this year, the industry has already brought in $349 million, putting it on pace for a new high. New York has been seeing a surge in venture capital in general recently, and has been turning out unicorns in other sectors too, such as mattress startup Casper. Inc.’s recent about-face on opening a new, huge office park in Long Island City was viewed by some as a potential blow to the city’s startup scene, though it hasn’t seemed to had an effect yet, at least on this corner of the market.