The wealthy owners of London-based second-hand fashion app Depop are set for a huge cash windfall after US giant Etsy announced it is buying the site for £1.2billion to tap into the growing Generation Z market.
Depop, which was founded by Anglo-Italian entrepreneur Simon Beckerman in 2011 and has been run by Spanish businesswoman Maria Raga since 2016, saw sales more than double during the pandemic to £49million.
Becoming the 10th most visited shopping site among Gen Z consumers in the US, it has caught the attention of Brooklyn-based Etsy, whose users’ average age is 39 and which is now seeking access to a younger generation.
By comparison, more than 90 per cent of Depop’s 30 million users in almost 150 countries are under the age of 26. The business now has offices in London, Manchester, New York, LA and Sydney and about 400 employees.
Though Depop declined to reveal how much Beckerman, 47, would make from the sale, the Guardian reported that he is likely to net £45million windfall.
His chief executive Raga, other senior employees and individual backers who have supported the business are expected to make a tidy profit.
Announcing the deal on Wednesday, Josh Silverman, the chief executive of Etsy, told investors that a quarter of the global workforce will be Gen Z by 2030, predicted to be 1.3 billion workers.
He said he expected the resale craze would continue long after the recovery from Covid, and that it would be led by Depop’s ‘passionate community’ of fashion-conscious young people.
‘This is an enormous demographic and it’s the trendsetter demographic,’ he told analysts on a call.
Beckerman, who founded Depop when he made the app ‘for fun’ in 2011 while working at fashion magazine PIG, owns about 4 per cent of the shares. He previously said he would ‘love to sell the company for £1billion’.
Depop was initially as a social network site where readers could buy items featured in a magazine, before it was overhauled as a platform where you can see what other people are liking, buying and selling.
It has been run by Maria Raga, who previously worked at Groupon, since 2016.
Beckerman has sold 26 items, mostly trainers, most recently a navy pair of Converse All Star trainers for £30. On a listing for a £130 pair of black/silver Nike Air Max 97s, he said: ‘Back in the early days of the internet I used to hunt these on Japanese classified websites and resell them in Europe to collectors’
Raga graduated from the University of Valencia with a business degree before moving to Boston to become a research associate at Harvard Business school, according to the Business of Fashion website.
She then went to Bain & Company, working as a management consultant for five years, obtained an MBA from INSEAD, and led business development at private sales company Privalia.
In 2010, Raga moved to London and worked on the founding team of MyCityDeal, which was later acquired by Groupon, and in 2014 joined Depop as VP of operations, going on to become CEO of the company two years later.
Singer-songwriter Lily Allen is among the celebrities who use Depop to sell their past outfits, while young users are going ‘full-time’ on the site by selling thousands of items a month.
Though for many sellers on Depop the money generated is a ‘side-hustle’, Bella McFadden, 24, who sells via a store called ‘@internetgirl’, said last year she hit the £1million milestone last summer.
McFadden, who lives in LA, told Fast Company she dropped out of college in 2016 to work on her Depop store full-time and now employs four people full time to work with her. To date, she has sold 61,491 items.
Beckerman has sold 26 items, mostly trainers, most recently a navy pair of Converse All Star trainers for £30.
On a listing for a £130 pair of black/silver Nike Air Max 97s, he said: ‘Back in the early days of the internet I used to hunt these on Japanese classified websites and resell them in Europe to collectors.
‘Nike subsequently released them in this colour around 10 years ago, and now again recently for the second time. This pair is brand new deadstock and I’m selling them because they’re not my size.’
In an interview with TechCrunch, Raga said: ‘Our mission is to redefine the fashion industry in the same way that Spotify did with music, or Airbnb did with travel accommodation.’
The Spanish businessman said of the takeover: ‘We’re on an incredible journey building Depop into a place where the next generation comes to explore unique fashion and be part of a community that’s changing the way we shop. They come to Depop for the clothes, but stay for the culture.’
Depop has around 30 million registered users, many of them youngsters who scroll through the images and buy what they like. This technology has also helped to build a sense of community between its users – many follow particular sellers for fashion advice or curated style tips.
Beckerman said: ‘This summer marks 10 years since Depop was founded, and I’m delighted to see it mark this anniversary by beginning an exciting new chapter.
‘What Depop offers – easy access to unique fashion and a vibrant creative community – is truly distinctive.’
The deal will also rake in a generous return for venture capital firms, including General Atlantic, Creandum, Octopus Ventures and Balderton Capital. But the takeover is a blow to British business, as the country loses ownership of another promising tech start-up.
Etsy said Depop’s HQ will stay in London, and it will be run by its existing leadership team.