GOAT Group raises $195M in latest funding round, valued at $3.7B

Eddy Lu, GOAT CEO & Co-Founder, joined Yahoo Finance Live to discuss the company's latest funding round and his outlook for the sneaker resale market.

Video Transcript

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BRIAN CHEUNG: Welcome back to Yahoo Finance. Let me introduce you to something real quick. That behind me right there, that's a pair of A Ma Maniere 3's. That's a pair of Air Jordan 1 Travis Scott's. And that's a pair of anniversary red OG Air Max 1s. If you tried to buy these at the release but you took an L, you could buy them on a resale platform. And GOAT is one of these secondary market sites. And the company just completed a massive new funding round. GOAT CEO and Co-Founder Eddy Lu joins us, as does Yahoo Finance sneaker guru, Reggie Wade.

And Eddy, I just want to kick off this conversation by asking you about that capital raise. You sold a 5.25% stake for $195 million that comes from Park West Asset Management that would value your company something close to $3.7 billion. First of all, what do you expect to use the money for? And then secondly, is a public offering maybe in the cards in the future?

EDDY LU: Thanks, Brian. Great to be here and I love your shoe collection and taste. So we'll have to talk about that later.

But first and foremost, couldn't be happier for the team. I mean, we raised at a $3.7 billion valuation in just nine short months from our series E fundraise of $1.8 billion. So congrats and kudos to the team. This is a testament to our continued differentiation in the space, where we are the convergence of not just the secondary and resale markets, but the primary markets as well, where primary vendors, such as Balenciaga, Alexander McQueen, and Versace, sell directly on our platform as well.

So you talked about our capital raise and potential future markets in the public markets. I mean, we just raised $195 million. We have amazing investors in this new round who are long-term focused. And the goal is to bring shareholder value to them and continue to build a long lasting, sustainable company. So that's goal number one.

REGGIE WADE: Eddy, Reggie Wade here. You guys had 100% yea-over-year growth in sneakers, 500% year-over-year growth in apparel, as we've seen during the pandemic more people flocking to shopping online. Do you have more room to run? And how far could this thing go? Are these kind of growth numbers sustainable as we go into a post-pandemic world?

EDDY LU: Hey, Reggie, good to see you. Well, I mean, we did over $2 billion in gross merchandise value in the past 12 months alone. And what we're seeing is like 80% of our 30 million members are Gen Z and millennial. They are the next generation of luxury and fashion consumers. Because it starts with the sneaker. Kids get excited about a sneaker, they get more interested in fashion, and they graduate into luxury. They graduate into lifestyle and fashion.

And this is what we're seeing, why the brands are so excited to partner directly with us. Because our platform, it's not just one of these commoditized marketplace. We have a point of view on fashion culture and style, so we make products look good. And on the apparel side, you mentioned 500% growth. We're just at the beginning of this journey. We're so excited to take our young consumers all the way through their lifestyle needs.

SEANA SMITH: Hey, Eddy, it's Seana. When it comes to what people are buying, what are the most popular items on your site right now? And I guess, how do you plan for that going forward?

EDDY LU: Hey, Seana. Well, Nike just reported their earnings. Jordans, of course, are still very, very hot. They continue to make iconic and amazing sneakers. But what we're seeing now that the world is opening up is that lifestyle luxury is getting more hot, because people, when they go out, they want to show off. And we're seeing companies like Versaces do really well in our platform as well.

REGGIE WADE: Eddy, Foot Locker is one of your major investors. Will we see more integration with Foot Locker in the back half of 2021 going into 2022?

EDDY LU: We're very excited about the Foot Locker partnership. It's a key strategic partner for us. I mean, like I mentioned previously on the show, they have 3,000 stores in over 27 countries. So the international play is very important for GOAT. We have three international facilities right now, in the UK, Netherlands, and Hong Kong. We're actually doubling that just this year alone into six facilities in China, Singapore, and Japan. So the knowledge that Foot Locker brings to us will really help us accelerate our international expansion.

BRIAN CHEUNG: Eddy, I want to ask you about not just the international expansion, but also about retail presence. Because you look at companies like the Real Real, they have experimented with maybe brick and mortar stores, where you can have some of the consignment items that people have put in for resale. Is that something that you've been kind of deeply exploring? I know other retail sites have been looking at that as well. Do you think that's a viable model in what is still primarily an online retail kind of first experience?

EDDY LU: We actually do have a few retail stores. Because we have two brands, the GOAT brand and the Flight Club brand. And Flight Club has three retail store footprints, in Miami, LA and New York. And since the reopening, these stores have done amazingly well. Conversion is an all-time high. Sales per square foot is at an all-time high. And it's because we have destination retail, right? These Flight Club stores are sneaker head meccas. People gravitate to these stores. And when they get there, they want to buy something because they're like, we're finally out. So we are so excited about the Flight Club brand and the retail presence that it's provided us, and we look to continue to invest in the physical footprint, because it is destination retail.

SEANA SMITH: Eddy, know you briefly touched on this before, but digging a little bit deeper into some of the spending patterns that you've noticed over the last several months during COVID. I guess, how has the pandemic, do you think, changed some of the consumer trends that we've seen and whether or not you think that's going to stick here going forward?

EDDY LU: Well, what we saw is that we did gain a lot of new consumers during the pandemic, because shopping in store wasn't an option. And what these new consumers saw was that shopping on GOAT was, in many ways, superior than shopping offline. Because there's so much breadth and depth of product. We have over 150,000 styles to choose from on the sneaker site alone. And it's not just this year's style. Something you were nostalgic about five years ago, you can find it on GOAT. And what we're seeing now as the world reopens is the fact that they're sticking, because they see the superior shopping experience, and they are continuing and we see accelerated growth continue.

REGGIE WADE: Eddy, I have to ask, is there a silhouette or certain model that has actually surprised you during the last year, that's really sold through and it really caught you guys off guard?

EDDY LU: I think, I mean, one, like I mentioned earlier, Jordan brand continues to outperform. I really think some of the artist collaborations are continuing to do very well. For example, I'm wearing a pair of Travis Scotts right now. And I think Travis Scott and his brand has done very well throughout the past few years.

BRIAN CHEUNG: OK, last question, Eddy. Dunks or Yeezys? One's got to go forever. You can only wear one.

EDDY LU: I'm wearing Dunks literally right now. And I think it's stood the test of time. I go with Dunk.

BRIAN CHEUNG: All right. How about you, Reggie? Quickly.

REGGIE WADE: I have to say Yeezy.

SEANA SMITH: Brian, give your thought.

BRIAN CHEUNG: --on both sides. No, I can't take sides here. I'm an objective journalist. But Eddy--

REGGIE WADE: Ah, come on. You put us on the spot.

BRIAN CHEUNG: Thanks for joining us here. Reggie Wade, Yahoo Finance, thanks for joining us this afternoon.