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Luxury consignment boutique lands VC money

Luxury Garage Sale, a designer consignment store and website, has nabbed $1.5 million from prominent investors to expand operations in Chicago and open a store in Dallas.

The seed round was led by venture-capital firms Chicago Ventures and Apex Venture Partners and by Brian Spaly and Elle Bruno of Trunk Club, the Chicago-based men's styling service acquired by Nordstrom last year.

North Shore natives and lifelong friends Lindsay Segal and Brielle Buchberg debuted Luxury Garage Sale in 2010 as a series of pop-up stores. They opened their permanent location two years later on Wells Street in Old Town.

Consigned items are marketed both in the store and online, previously through eBay and now through Luxury Garage Sale's own e-commerce platform, which launched at the end of 2013. The multiple channels offer consigners the promise of increased visibility and a higher likelihood that their items will sell. Consigners of pre-owned items, which range from vintage jewelry to $60,000 Hermes Birkn bags, receive up to 65 percent of the sale price.

In addition to partnering with well-heeled women looking to unload designer pieces, Segal and Buchberg work with stores across the country to sell their unworn overstock at discounted prices. More than half of Luxury Garage Sale's inventory, which spans labels from Chloe and Alaia to Kate Spade and Michael Kors, is new with tags.

Ezra Galston, a senior associate at Chicago Ventures, said Spaly introduced his firm—which mostly invests in tech startups—to the Luxury Garage Sale founders a year ago.

"We saw two extraordinarily hardworking entrepreneurs who had overexecuted with minimal resources," he said. "And in doing so they built something of an iconic brand for fashionable millennial women."

Galston and other investors say Luxury Garage Sale's "relationship-driven, white-glove service" sets it apart from competitors.

"The sharing and resale economy neglects the luxe experience traditionally associated with designer shopping," Spaly said in a statement. "Luxury Garage Sale stands for this experience." He will join the company's board of directors.

The investment underscores the technology world's interest in "omnichannel" shopping, which combines e-commerce with physical stores to make purchases as easy and tempting as possible.

Other successful retail startups including eyewear company Warby Parker, makeup seller Birchbox and menswear line Bonobos, began as e-commerce plays that later opened brick-and-mortar boutiques to help increase brand awareness and allow customers to touch and feel the products.

Galston said Luxury Garage Sale will follow the same path. "The digital side of this business is going to help drive scale, and the physical side is going to help drive relationships," he said.

Luxury Garage Sale's Dallas store will open sometime this spring, according to Segal. She said the money also will be used to hire additional staffers in Chicago.