THE BUSINESS OF BEAUTY

How to Get a Million-Dollar Check For Your Beauty Business

The brains behind brands like Kosas, Black Girl Sunscreen, and Function of Beauty share their secrets to scoring crucial investments.
three lipsticks and a round makeup compact are lit so a rocketshaped silhouette appears on the wall behind them
Photographed by The Vorhees

Almost all beauty business founders face a moment in their journey when they have to make a decision: take on an investor or try to support the business on their own for as long as possible? Beauty is booming now, and investors large and small are looking for companies to invest in, hoping to nurture the next Drunk Elephant or Deciem. But that doesn't mean that just anyone is going to provide capital, or that founders should necessarily take a bunch of money even if someone does want to fund them. Allure spoke to beauty founders in all stages of their businesses and asked how they decided they were ready to grow and how they convinced someone to write them a big check.

Good Press Is Priceless

Sheena Yaitanes, 37, studied biology in college, got an MBA, and even worked as an actor for a while. But she always saw herself starting a beauty brand, and in 2015 launched Kosas with about $70,000 of her own savings and four riffs on classic lip colors.

One of the first things she did as a new business owner was to hire a boutique public relations firm that was scrappy and affordable, which netted her early good press. As Kosas expanded into more categories (like foundation and eye shadow), its fans grew, gaining a reputation as an "anti-glam brand." Yaitanes started getting interest from investors who wanted a piece of the beauty industry, but some had no experience in it. "Those people were not a good fit," she says. "They didn't understand the emotional nature of makeup." It came as a shock when one potential investor told her that it was more important for a brand to have a social and environmental impact (like nontoxic tampons) rather than the way it actually performed on the face.

The best piece of advice she received was to check in with the companies that potential investors work with and ask how they handled bad times. It's ultimately what led her to choose her most recent investors, a decision she is very happy about as COVID-19 brings uncertainty to every industry.

Network to Increase Your Net Worth

Convincing consumers and investors that sunscreen is necessary for people with darker skin tones wasn't easy. "The myth of Black people not wearing sunscreen — that's the biggest hurdle of them all," says Shontay Lundy, founder of Black Girl Sunscreen. But it’s a challenge she met, not only convincing consumers but also eventually bringing in outside funding.

Lundy has been working since she was a teenager in upstate New York — paper route, waiting tables, retail management. After nine years as a regional manager in the car rental industry in Miami, she transitioned out of that field and moved to Los Angeles. Her time in warm, sunny climates turned her into a sunscreen enthusiast, but so many products didn't work for her deep-brown complexion. They left her looking chalky and feeling uncomfortable. So Lundy created her own, using about $30,000 of savings.

She got the word out about Black Girl Sunscreen inexpensively, via social media, podcasts, radio, and community events. And when she needed more money to grow the brand, Lundy looked for guidance in small, entrepreneurial communities like Ureeka and New Voices. Lundy credits the relationships she built there early on with helping her find an investor.

She pitched to only six investors because she knew her product was niche and wanted someone who really understood it. "We didn't reinvent the wheel here," Lundy says. "However, we are speaking to an underserved community on sun safety." According to Forbes, Lundy secured $1 million in outside funding, which she is using to squash the myth around melanin and sun protection.

Spread Community (The Lucrative Kind)

In 2017, Randi Christiansen left a cushy job she loved at Estée Lauder. In 2018, she and Nick Axelrod, who cofounded beauty website Into the Gloss, launched Nécessaire. (Axelrod left the brand last spring.) The sparsely designed, sustainable, personal-care brand debuted with body products, because knees and elbows are often an afterthought. "We have a lot of real skin issues on the body that deserve to be treated with real skin-care ingredients," says Christiansen. "We like to say treat your body like your face." Nécessaire uses some of the same ingredients as high-end skin care, including hyaluronic acid, niacinamide, and peptides.

When it came time to look for funding, Christiansen and Axelrod had connections in the industry, but it wasn’t easy. Christiansen, 45, calls it a "dance": "You have to listen carefully and turn the maybe into a yes.... By asking us the right questions, [our investors] helped us sharpen our brand messaging," she says. Her advice: Walk into a meeting with a clear idea of the market opportunity. "You have to be able to share how you believe you can win and make noise in a crowded space."

Another important piece for any brand is to find its community. "You're like, 'Wait a minute. My door is open. Why are 20,000 people not walking in?'" Christiansen recalls of the early days building Nécessaire's fan base, which is now populated by beauty Instagram's most influential set, which loves to document their bath routines. "You have to show that your idea has adoption and a community effect," says Christiansen.

Use Concrete Data As Proof of Concept

Since 2015, Elsie Rutterford and her BYBI co-founder Dominika Minarovic have been building up a passionate following via their U.K.-based platform "Clean Beauty Insiders," which includes a blog and podcast. So when they launched their beauty brand in 2017 complete with an affordable price tag and a commitment to get to sustainable and carbon neutral production, that fanbase was ready to buy their products. Just a few years later, they landed a $7 million investment and launched stateside into over 1,800 Target stores in January 2021.

The duo started raising money slowly, first approaching friends and family, says Rutterford, 34. “You may not think that you have many budding angel investors in your networks," she says, but notes that loved ones or former colleagues may have some funds they're willing to invest. ?After an initial investment of around $200,000, the brand took off and started yielding what was key to their later, larger investments: data that indicated strong sales and customer loyalty.

When pitching a new brand, Rutterford says you have to rely on selling a vision and the personalities and strengths of your founding team. Those things remain important in later funding rounds, but having concrete metrics about how your brand sells and how it's growing can really clinch the deal.

Still, even with a solid vision and decent numbers, Rutterford warns to steel yourself for rejection, which BYBI has experienced. "What we've learned is to use every rejection as a positive and to push for feedback," she says. "Then you just take everything you learn and you pour it into the pitch moving forward."

Look for Investors In Unexpected Places

When Function of Beauty was founded in 2015, its premise — a Willy Wonka-esque process that would mix up custom hair care in millions of different combinations — seemed too fantastical to last. But over six years later, Function of Beauty has expanded its customization concept into body care and facial skin care, landed in shelves at Target, and closed a whopping $150 million strategic minority investment from several players in the middle of a pandemic.

To launch the brand, CEO Zahir Dossa, 34, and his co-founders chipped in about $30,000, then got $5,000 here and there from various family members. But then Silicon Valley, where Dossa had roots, came calling. Function of Beauty was one of the first direct to consumer companies start-up accelerator Y-Combinator backed, which meant the brand could get mentorship, cash, and access to a network of potential investors.

Still, some investors didn't always get the concept. "It was a company and a value proposition that a lot of traditional VCs just didn't really understand initially," says Dossa. But customers were drawn to the idea of being able to choose their own scent and add ingredients to address specific hair concerns. And more investment money followed. "Once [investors] saw growth and traction, it's really difficult to ignore those things," he says.

He also makes the case for having confidence in yourself. "At the end of the day, we really did think we were solving the biggest problem in beauty with the very best team."?

Don't Be Too Eager to Take the Biggest Check

When Hero Cosmetics launched in 2017, it was with one trendy K-beauty inspired item: the Mighty Patch. Now, it's expanded into a more complete skin-care line focused on acne, including multiple types of pimple patches, a post-acne treatment, and a cleanser. Co-founder and CEO Ju Rhyu, 41, just closed her first round of funding for Hero, which is sold at Ulta, Amazon, Target, CVS, Walmart.com, and other retailers.

Rhyu made the decision to grow her brand slowly, and it was profitable early. But having products in multiple national retailers means you have to be able to keep up with large orders. If you can't, it can "ruin brands," says Rhyu. So she needed to find a Goldilocks amount of funding.

When a brand takes on an investor, the founders are essentially giving up a percentage of the business, so Rhyu wanted to be strategic about where she got the cash Hero needed to grow. Some potential investors were talking about amounts that made her uncomfortable. "Big checks probably come with big expectations," Rhyu explains. "If an investor puts in a lot of money, they're probably going to require some kind of multiple return on that over a certain period of time."

The brand started the process of wooing investors in February 2020, a process Rhyu says was helped along by all the press coverage the brand has received. Then COVID-19 hit, the Dow dropped, and all deals were off the table. The brand finally struck a deal that worked for everyone involved in November.

Rhyu considers investors extensions of the founding team, helping her to navigate the future. Her piece of advice? Continue to be disciplined about how you spend an influx of money. "I think it can ruin those good habits and break your discipline and then you start just spending crazily," says Rhyu.

A version of this story originally appeared in the February 2021 issue of Allure. Learn how to subscribe here.


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