Travel abroad: Making sense of Away’s new $8.5M Series A (and its big, global ambitions)
Does the quick rush to expand globally by suitcase brand Away (after less than a year in business) point to a larger trend among modern luxury brands?
NEW YORK — Early Friday morning, as people’s minds were already halfway out the door towards the weekend, news of Away’s new Series A descended down upon us, a flicker of optimism on the eve of the fifteenth anniversary of September 11th.
The round, led by Global Founder’s Capital (GFC), the venture fund for Berlin-based Rocket Internet, brings Away’s total funding so far to $11 million. Original seed investors, Kirsten Green’s Forerunner Ventures, and Accel Partners (whose pointman for Away, Brian O’Malley, has experience investing in Joor and J.Hilburn prior to joining Accel) also participated, as did Comcast Ventures. But it is the participation of Barry Sternlicht, founder of Starwood Hotels Worldwide (St. Regis, W Hotels, Le Méridien), alongside GFC, that serve as the weathervanes here.
There was something different about this fundraising announcement. It’s not just that founders Jen Rubio and Stephanie Korey raised a cool $8.5 million. It’s not just that Forerunner’s eagle-eyed Kirsten Green placed a larger bet on a surefire DTC success story (yet again). It is, rather, what the money will be used for — mostly, international expansion. Series As for modern luxury upstarts are typically used for developing the product line, adding new staff, perhaps expanding their domestic bricks-and-mortar presence. Though some of that capital will be going towards these (a new location in LA is in the works, and a new permanent NYC location is coming later this year), the prime objective stated by Away is more akin to something of an international Manifest Destiny: growing Away’s retail footprint in the markets abroad that matter most for them at the moment, London and Berlin.
For a modern luxury brand so young, this global march is unprecedented. Warby Parker, for context, only just expanded internationally in August — this in its sixth year of business, and notably, a mere one-and-a-quarter-hour plane ride north of NYC to Toronto — not overseas. Away is not even a year old. It launched in November 2015 for pre-order, and shipped its first suitcases in February. Ms. Korey and Ms. Rubio are on track to sell 50,000 suitcases for 2016, and claim to be nearing $10 million in sales.
But by our calculations, that seems a little low. Their least expensive suitcase is $225, so if all 50,000 sold were just this model, that would give them at least $11.25 million in sales. Casper’s latest valuation at their last raise was a 5.5x multiple on revenues ($550 million on a $100 million turnover). Away’s backers are probably angling for a similar rate, so let’s estimate that Away is currently valued somewhere between $40 million and $50 million. Not bad for year one. Still, Warby Parker is valued at over a billion dollars today, and Casper, edging ever closer to that mark, has fully committed to Europe this summer, with a growing office stationed in Berlin. For a company the size of Away, in other words, this is an early, confident, and dare we say audacious, statement of intent.
The good news is that in GFC and Mr. Sternlicht, Away now has two key investors who can help make this international transition a smooth and successful one. GFC’s presence in Berlin and Munich are just what Ms. Korey and Ms. Rubio need, and Mr. Sternlicht’s expertise in high-end hospitality offers not just a strategic investor who can offer insight on markets abroad, but a partner who can also open up doors (literally) to key hotel partnerships for Away. Imagine, say, an Away concept store or pop-up at the W Hotels in Paris, Amsterdam, or Barcelona (allowing Away to test out new markets without much trouble), and the opportunities become obvious rather quickly.
It’s also important to note that Ms. Rubio’s and Ms. Korey’s ambitions for Away are not just limited to suitcases. There’s a big lifestyle push at play here, and as a company built around the joys and wonder of travel, this global outlook makes sense. On Friday, Ms. Korey told the WSJ that Away has “an unusual strategic initiative in being a travel brand that we need to be a global brand early,” and in order to achieve that goal, they’re concentrating more on handling their own distribution and perfecting the Away retail experience. Like most modern luxury founders, Ms. Korey and Ms. Rubio are consciously apathetic towards wholesale and third-party distributors. They want complete control over the entire brand experience from top to bottom. “If the internet had always existed, wholesaling never would have happened,” Ms. Korey told the WSJ. That says a lot right there.
So what does Away’s shiny new Series A, and its grand global plans say for the modern luxury market overall? Are we witnessing the initial sparks of a broader trend, one where brands start aiming for international expansion much earlier, or is Away’s international focus an anomaly specific to them? It’s a nuanced answer, but we consider this global outlook something unique to Away. For many emerging luxury companies, global expansion and establishing permanent retail spaces around the world will be important, certainly. But few will be looking to do so as soon as Ms. Korey and Ms. Rubio have. Away is slightly different given that they’re a travel-inspired operation. So for them, the quick international move is more natural.
It still, however, will be fun to observe whether other brands start making global plays going forward, and we will certainly be keeping our eyes open for any emerging trends in this regard.