Yahoo Finance

Rep the Squad CEO Brian Watkins (left) poses with other workers at the company's Seattle headquarters.
Rep the Squad CEO Brian Watkins thinks his sports jersey rental service has validated its business model. Now, it's time to scale. And that will require another round of funding.

"In my mind, our model is ready to have those conversations," said Watkins, who launched Rep the Squad in 2017.

Following the lead of popular clothing-sharing companies such as Le Tote and Rent the Runway, the Seattle-based Rep the Squad offers a subscription service where customers pay a monthly fee ($19.95 for adults, $17.95 for kids) to be able to rent and exchange jerseys at their discretion. After initially offering only NFL jerseys, the startup expanded into the NBA in November and launched an MLB line in February.

The company previously announced a $1.5 million seed funding last August from a diverse group of investors, including established VCs like Madrona Venture Group and Maveron, and NFL players such as Golden Tate and Doug Baldwin. The round actually closed on $2.5 million, per Watkins, as Brand Foundry Ventures helped finish off the funding.

Watkins, an ecommerce veteran who previously founded online jewelry company Ritani after stints at Nordstrom, Blue Nile and Wetpaint, thinks that previous financing accomplished its purpose.

"It's a classical seed round," he said, "where we went in with a lot of unknowns and we're coming out very, very knowledgeable and are looking forward to expanding that offering over time.”

And what has the startup been doing with that funding?

"It's a little bit of everything,” Watkins said. “Some of it does go into we have to have inventory. But part of it goes into this idea of building the operation, building it successfully."

Seven months after its launch, Rep the Squad currently offers jerseys from teams based in the Bay Area, Los Angeles, Denver, Detroit and Seattle, leaving plenty of room for expansion. Also working in its favor: Rep the Squad doesn't face any direct jersey-sharing competitors. And while Watkins declined to disclose details on its customer base, he said he's "extremely pleased" from a user standpoint.

The company's biggest challenges include connecting with potential customers at game-day kiosks, maintaining its post-launch momentum and finding the right jerseys at the right time—and for the right price. Rep the Squad doesn’t currently have an operating agreement with any pro leagues, so the company buys jerseys at the wholesale level.

"I'd be really happy to get some Richard Sherman jerseys right now, but they're pretty hard to come by,” Watkins said. “But the supply chain works itself out. And one day—and it won't be in the next year—but one day we'll have the right to manufacture customized jerseys so we can take a blank 49ers jersey and put ‘Richard Sherman’ on it. But that's for the visionary stuff. Not what we're doing today."

What Rep the Squad is doing today can be put more simply.

"There's going to be fundraising and future expansion on the horizon," Watkins said.