By Rotation, a peer-to-peer fashion rental platform, has raised $3 million in seed funding.

The round was led by Redrice Ventures, with additional participation from Closed Loop Partners, True Global and Magnus Rausing, amongst others. The UK-based company will use the funding to expand its team and prepare for international expansion.

By Rotation was founded in 2019 by Eshita Kabra, a former investment manager who launched the company after wanting to borrow clothes for her honeymoon. The app, which has only been available in the UK, has grown to over 200,000 users.

Unlike businesses like Rent the Runway or Urban Outfitters’ Nuuly, By Rotation operates as a marketplace for lenders and renters, and takes a 30 percent commission. The app’s top brands are Rixo, Ganni, Zimmermann, Jacquemus and Gucci, and the average order value is £50. By Rotation’s annual recurring revenue is over £1 million, Kabra said.

By Rotation’s interface has also been built like a social network, which has attracted investors like Redrice Ventures. Users can follow each other to stay on top of rental activity, and can also browse each other’s closets — a feature that’s made resale marketplaces like Depop and Poshmark popular.

“People are proud of their profile and become mini stylists who can monetise their taste,” said Kabra. “And it’s quite democratic, where the community decides what’s cool.”

By Rotation will use its funding to expand into other markets in Europe, and will also launch in certain markets in the US later this year. Within the US, it will compete with fellow peer-to-peer rental startups like Tulerie and Wardrobe.

Investors of all sizes now have their eyes on rental. In December, UK-based rental company Hurr raised $5.4 million in funding, led by the European venture capital firm Octopus Ventures. Last June, Kering invested in handbag rental company Cocoon.

Still, the market is competitive, with Rent the Runway and Nuuly, as well as brands like Banana Republic, Vince and Scotch and Soda using rental platform CaaStle to power their rental services.

In February, fashion rental startup Seasons shuttered and founder Regy Perlera told BoF his startup was struggling with the high costs of buying inventory and managing logistics, despite having raised $5 million. Menswear rental subscription company The Rotation, which offered customers clothes from companies like Heron Preston and Alexander McQueen, also ceased operations last year.

Tom March, founder and managing partner of Redrice Ventures, said peer-to-peer businesses, by contrast, are attractive because of their low overhead.

“Other business models in rental that spend on dry cleaning or holding stock struggle, but if it’s peer-to-peer, you have a much lower cost base,” March said.