There are ample doses of luck and good timing along with skill in the recipes of any brand with a successful business. The same can be said for a successful fundraise, as the experiences of Julian Addo, founder and CEO of Adwoa Beauty, Hillary Peterson, founder of True Botanicals, and Rachel Reid, founder and CEO of Subtl, illustrate.
The three founders shared their fundraising experiences during a recent Beauty Independent In Conversation webinar, where they divulged the aspects of their brands that convinced investors to fork over capital and imparted advice to budding beauty entrepreneurs.
Ground-Level Funding
Former CEO of luxury skincare brand Marie Veronique, Peterson launched clean skincare brand True Botanicals in 2015 after a bout with thyroid cancer. She invested about $100,000 from her personal savings to get the brand off the ground in direct-to-consumer distribution. In 2017, True Botanicals secured $3 million in seed funding in a round led by Unilever Ventures, the venture capital arm of consumer packaged goods conglomerate Unilever.
Peterson credits Mats Lederhausen, managing partner of investment firm Be-Cause, a participant in True Botanicals’ seed round, and growing awareness of clean beauty as influential in the brand nailing down seed funding. “There was so much discussion about toxins in beauty products. It was just like this moment where there was an awareness that didn’t exist before,” she said. “So, we were able to bring on an early-seed investor who is very respected in the space of sustainability. He connected us with a lot of other people, which was extraordinarily helpful.”
After leaving a corporate gig as assistant vice president of Bank of America, Addo freelanced for Sally Beauty while developing textured haircare brand Adwoa Beauty. She sunk about $80,000 from her personal savings into Adwoa before it launched in 2017. Its first purchase order cost about $55,000 for nine stockkeeping units.
“I was delusional launching six products with no financial backing, but every month that I would get paid with my freelance money, I’d buy the logo, I’d buy the website, I’d buy something, and literally 10 months later I had a brand,” said Addo. “I didn’t expect for it to happen the way that it did or as fast.”
Adwoa Beauty quickly found an audience. By 2018, the brand had made its first $1 million in sales. Addo leveraged a $20,000 personal loan as well as business loans from Shopify Capital and PayPal Capital to keep Adwoa’s momentum going. “I couldn’t compete with any brand on money or marketing or influencers,” she said. “Where I could compete and still can is in customer service because the bigger brands often lose that personal touch and transparency. So, I built Adwoa Beauty through our email list and through our social media.”
Similar to Addo, Reid funneled every penny from her project management job into launching makeup brand Subtl in 2019. Recognizing the importance of outside capital in jumpstarting growth, Subtl joined the Pittsburgh software accelerator AlphaLab to amass a network of local angel investors and family offices. It reeled in about $1.2 million in seed funding through the accelerator and various investors.
“They may not have been as familiar with the beauty industry, but they were able to see what I was able to achieve in a very short amount of time,” said Reid. “We sent regular updates to different members of the community showing our revenue growth over time, average order value and lifetime value. We were able to slowly get one or two checks here and there over the years before we ended up raising our series A.”
Later Funding
Propelled by growing sales, True Botanicals reached profitability soon after its seed round was completed. A few months later, Unilever doubled down on its investment in the brand when it joined Sonoma Brands and Cue Ball Capital in a $8 million series A round in 2018. Peterson spoke with about 20 investment firms before connecting with Sonoma Brands, which led the round. She noted True Botanicals’ strong online business—95% of its sales originated from its DTC channel—sealed the deal with the consumer private equity firm.
“Most of their investments were heavily focused on retail, and we were cracking the code on building an online community and on acquiring new customers through DTC,” she said. “So, they were really interested in learning about that expertise and sort of balancing out their portfolio with that knowledge.”
By 2022, True Botanicals was grossing about $50 million in sales. By the next year, it had scored an undisclosed amount in series B funding from Credo backer NextWorld Evergreen. “What was most important to them was the authenticity of our mission,” said Peterson. “We had a strong foundation in terms of profitability, and so I think they could envision how we could grow from there. We also had very clear goals in terms of how we would use the funds, and I think that was really very important to them to supercharge growth.”
Adwoa Beauty wasn’t ready to fundraise when it began receiving calls from investors in 2019, but Addo took as many meetings as possible to lay the groundwork for future fundraising. In spring 2020, the brand landed in 100 Sephora doors. Two years later, saddled by high freight fees and supply chain headaches, Adwoa kicked off a fundraising effort to support its Sephora business.
The brand secured a $4 million investment from strategic growth and advisory platform Pendulum in August 2022, four months after initiating the fundraising process. Addo identified her readiness and earlier diligence in establishing connections as reasons for the accelerated timeline. She said, “It’s really important to start building that network and having those relationships before you need the thing, so that when you’re ready and you need the thing, there’s already a relationship there.’
Burnt out by countless investor calls, Reid kept her head down and focused on growing Subtl’s awareness and DTC sales after the brand’s seed round. In 2021, the brand caught the attention of Cult Capital, a growth investment firm with the beauty brands Act+Acre and Lawless in its portfolio. Interested in expanding Subtl’s sales channels, Reid initiated discussions with Cult Capital co-founder and partner Sarah Woelfel. By late 2023, the brand closed on a $5.5 million series A round, and Cult Capital was the lead investor.
Reid said, “By the time I was ready to step out of e-commerce, which I know like the back of my hand, and into a space that I don’t know as well, that’s when I realized how important it was to partner with somebody who can bring expertise in addition to capital to help us grow.”
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