Madison Reed, who made DTC hair color a thing, is now aiming for a bigger retail footprint – TechCrunch

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Madison Reed proved that women would buy hair color online, but over the years the company, founded by Amy Errett, opened more than 60 hair color bars across the country, established a wholesale presence with Ulta and later closed Ulta’s deal with Target. while operating the Amazon website and sales.

We last checked in on Errett two years ago, when she discussed Madison Reed’s hair color bars, how the pandemic has affected the business, and the possibility of a color category. for men.

Now that direct-to-consumer, national retail and hair color bars are doing well, the eight-year-old company wants to build even more local relationships with customers by increasing the number of color bars it operates. across the country and have a presence at the retailers where they typically shop. At color bars, hair color is applied by a licensed professional faster and more cost-effectively than traditional salons, the company said.

“I’ve been doing this for a while, and I don’t think mainstream brands can be single-channel and successful,” Errett told TechCrunch. “We are at the service of the consumer, and he shops everywhere. We realized we needed to track where customers were, and then our business exploded. »

With a new investment of $33 million, plans are underway to add 20 more color bar locations and hire 850 new colorists by the end of the year, Errett said. It expects the company to have 100 stores by 2023. The company is targeting regions such as New York, South Florida, California, Chicago, Washington, DC and Texas.

The new funding, which gives Madison Reed total funding of approximately $250 million to date, was led by Sandbridge Capital, with participation from Marcy Venture Partners.

Errett described the funding as “very opportunistic” because the company was now actively fundraising, but when she got to know Sandbridge, which invests in beauty companies like ILIA Beauty and Youth to the People, she felt that they understood the consumer and the market. Same with Marcy Venture, Jay-Z’s fund, which has invested in Savage X Fenty – also known as singer Rihanna’s company – and is tapped into media channels.

“We are thrilled to have them both on board,” she said.

In addition to the new color bars, Madison Reed will invest the new funding in additional product launches; Sadly, Errett was tight-lipped about what it was, but we can only assume the men’s flush might be back on the table.

“We already had capital in the bank, but this gives us the arsenal to keep our heads down and execute. Now is where the rubber meets the road,” she added.

Meanwhile, Errett said there are more opportunities for the global hair coloring industry, which is expected to be valued at over $40 billion in 2023. In this sector, an estimated 40 million Americans used permanent hair color products in 2020.

For example, Madison Reed has seen its gross margins on products reach more than 80% and its turnover double in the last two years. Errett believes the company has made inroads into the home market and is now beginning to gain market share in the salon market.

Meanwhile, in March, Madison Reed hired Jose Zuniga as CFO. Zuniga was previously with Dollar Shave Club and leads the company’s omnichannel expansion.

“We focused on finding someone with experience in consumer packaged goods, but not the traditional way of doing it,” Errett said. “Dollar Shave Club disrupted an industry that no one paid attention to. When I got to know Jose, he understood the financial model, understood the retailer shelves and had the content skills. We thought he would be a wonderful cultural fit.

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