Queenly, a startup building a garment marketplace aimed at dressing women for formal events, announced this morning that it has purchased Mi Padrino, a company built to serve the quinceañera market.
The two companies’ overlap is obvious: Quinceañeras, events where girls celebrate their 15th birthday with a large event and ornate garb, is an event varietal that Queenly’s product supports. The deal caught our eye not for a lack of synergy, then, but more due to the relative youth of Queenly itself.
TC has wondered whether the present market downturn would lead to startup-on-startup M&A activity. The Queenly deal is one datapoint that supports that particular thesis.
And Queenly is a startup that several of us at TC have had our eyes on since its days as part of Y Combinator and through its 2021 fundraising events. So when it reached out with news that it had, despite its relatively modest corporate age, bought something, we got on the phone. Let’s talk about it.
Queenly’s growth
TC caught up with Queenly CEO Trisha Bantigue this week to discuss the deal and the status of her formalwear-focused startup. (If her name sounds familiar, recall that Bantigue came on the Equity podcast to chat about remote accelerators in early 2021 and wrote an essay about the mental health impacts of building a startup for Fortune in 2022.) What we wanted to find out was simple: How is the company performing, and why is it buying another startup so early in its life?
On the performance front, things appear to be going well at the company. Because Queenly is inherently tied to the IRL market, as COVID wanes in consumers’ minds and formal-dress events creep back onto our calendars, you might expect that it is posting rapid growth in recent quarters. Correct. Per Bantigue, Queenly’s business has effectively doubled from Q4 2021 to Q1 2022, and again from Q1 2022 to the second quarter of this year.
That growth does not all stem from the company’s original business. Over time, Queenly has expanded its model beyond user garment resale. It also works with smaller brick-and-mortar prom and formalwear stores that lack a digital presence and has deals with some clothing brands to sell directly through its website. Resale remains about 75% of Queenly transactions, according to Bantigue, with a further 15% coming from small-business partners and a final 10% from designers themselves.
The Mi Padrino deal
Bantigue said Queenly initially linked to Mi Padrino via an investor. During an early call, Bantigue learned that it was for sale. Although she didn’t expect to buy another company so early in her startup’s life, she ran a diligence process and, after months of research and hammering out the deal, Queenly’s work to acquire the smaller company wrapped around two weeks ago.
Terms were not disclosed, but in this case, we’re not too mad about it. Why? Because what Queenly bought was not a large, operating business; Mi Padrino had contracted to a diminutive scale in personnel terms by the time that it sold. And Queenly is only keeping Mi Padrino’s dress-focused business, leaving the rest of what its acquisition provided behind it. (DJ and photographer recommendations are useful, but don’t neatly land inside of what Queenly does.)
So what is really being sold? Brand, content, and history, it appears. The Mi Padrino brand is better known in Hispanic circles than Queenly, the latter company explained, and it has a library of content that could help bring more customers to its new corporate parent. Queenly gets a deeper hook into a large formalwear market, potentially helping it keep up its growth cadence — the majority of Mi Padrino’s revenue was sourced from its dress-related business, Bantigue said.
Beyond the transaction, Queenly is working on a community aspect to its business that it likened to Sephora’s, as well as a brand ambassador program for the upcoming school year. Finally, co-founder and CTO Kathy Zhou is building a reverse image search so that users can bring an image of a dress that they love to Queenly, which will then be able to help them find and buy it.
The clothing resale market is large and growing. And despite some troubles at Rent the Runway, it is clearly a place where technology will have a long-term home. Let’s see how fast Queenly can grow in the back half of 2022 and whether that shakes loose more capital.
