By clothing-bag, 20/12/2022
8 Celebrity Brands Top Investors Think Will Increase In Value Next Year
Celebrity brands have long since ceased to be vanity projects to become, in some cases, lucrative enterprises. Some of them reached valuations of $1 billion and attracted the attention of people outside of their fan base.
“Certain celebrities have near-universal appeal, and those are the kind of people you almost want to go out of your way to work with, because they are such a rare bunch,” says Luke Pappas, director of NEA.
Some of these celebrities made massive outings: In 2017, George Clooney sold his tequila line, Casamigos, for a staggering $1 billion; Dr. Dre sold his Beats to Apple in 2014 for $3 billion. Other stars maintain their wealth while the value of their brands soars, like Rihanna's Fenty Beauty, a partnership with LVMH; Kim Kardashian West's Skims, which was valued at $1.6 billion in its latest funding round.
But not all celebrity brands are going to hit $1 billion valuations. Many falter after the initial anticipation fades; and investing in celebrity brands can be dangerous, as they are prone to scandal.
With the emergence of so many famous brands —in the tequila sector alone there are at least 10 competing and dozens in the cosmetics sector—, which ones are really poised to stand out?
Insider asked four leading VCs and angel investors which ones do they think will take off in the next 12 months?
Each investor chose two companies, including one in which their company does not invest.
Investors include:
Most of the chosen companies are in the field of consumer goods. Alcohol and cosmetics—which have been celebrity favorites since Sean Combs' Ciroc; or Elizabeth Taylor perfume—reign as celebrity brands. Although some of them are beginning to support less conventional companies, such as the sex technology brand Maude.
Here are their top picks, listed in alphabetical order:
Fenty Beauty
Total Funding: N/A
What it does: This affordable makeup line caters to a wide range of skin tones.
Why investors like it: Launched as a joint venture with LVMH in 2017, Fenty Beauty has Rihanna's name attached to it — the brand is named after the artist's last name, after all. But the makeup line quickly gained a following well beyond its fan base.
The company offers items under $50 and targets a much broader demographic than many makeup lines; It has 40 shades of makeup bases.
It is also important to highlight for the success of the makeup line the generous sales space assigned to it at Sephora, another LVMH brand.
“As a consumer investor, I like to spend time in the retail stores and at Sephora, where there is a big space for Fenty Beauty,” said Frederic Court, founder of Felix Capital. He added that it is a brand that really stood out even though he has not invested in it yet.
Since its founding, Fenty Beauty has expanded to 50 shades and launched other cosmetics and a skincare line.
Customers respond in kind. The popular brand is valued at $2.8 billion, according to Forbes. That makes Rihanna, who owns half of it, a billionaire.
Haus Laboratories
Total funding: $10.4 million, according to PitchBook
What she does: A Lady Gaga makeup line sold exclusively on Amazon.
Why Investors Love It: Launched in September 2019 in a crowded makeup market, Gaga's line differentiated itself with bold colors and marketing that emphasized her makeup creator's message of diversity, inclusion and self-expression. celebrities.
"Sometimes beauty doesn't come naturally from within," Gaga wrote in an Instagram post surrounding the launch of Haus Laboratories. "But I'm so thankful that the makeup inspired a bravery in me that I didn't know I had. I have come to accept that I discovered my beauty by having the ability to invent and transform myself."
Most Amazon customer feedback is positive about the line, which has since been expanded with new shades, items, and box sets. Gaga told Allure that she was heavily involved in the development of Haus Laboratories, helping to create themes, tones, and variations.
“What I like about [Haus Laboratories] is the depth of their involvement in the company in terms of involvement in the product and the creation and the chemistry behind it: the packaging, like every piece behind the scenes” said Mercedes Bent, a partner at Lightspeed Venture Partners, which is an investor in Haus Laboratories. "You don't always think celebrities are going to go very deep into [their brands], but they really do, and I think that's an amazing example."
Maude
Total funding: $10.24 million, according to PitchBook and the company
What it does: This "sexual wellness" company offers products for the bedroom, including candles, sex toys, and the brand's signature vibrator.
Why investors like it: Unlike the plethora of celebrity liquor and perfume brands out there, Maude differentiates itself from other celebrity brands by offering sex toys.
Founded by Eva Goicochea, who was one of Everlane's first employees in 2018; The company applies the streamlined and simple aesthetic of DTC to the wellness industry. Last year, Dakota Johnson, the star of "50 Shades of Grey," joined the company as co-creative director and investor.
"We're very excited about their modern, sexually positive approach to the intimacy space," said Catharine Dockery, whose firm Vice Ventures is an investor in the brand.
Vice Ventures focuses on spaces that are often taboo, including cannabis, sex technology, CBD, and more. And he's betting that any remaining stigma around wellness and sexual enjoyment will continue to dissipate.
"Reminders are the best way to fix your mistakes"Throwback during our exhibition at the Kuantan Municipal Council… https://t.co/BXLrPcK1Zk
— VortexRacingMY Fri Nov 01 07:57:58 +0000 2019
In June, Maude raised $5.8 million in a Series A round, helping it reach a valuation of around $30 million and becoming one of the few sex tech companies to make it past the initial fundraising phase.
The company, which now sells its products in high-end stores including Nordstrom, Saks and Bloomingdale's, saw revenue growth of 200% year-over-year. This number is expected to increase as it soon plans to start internationalizing its business.
Re-inc
Full funding: Not disclosed
What it does: This streetwear and lifestyle brand creates gender-neutral clothing and accessories.
Why investors like it: Launched by soccer stars Megan Rapinoe, Christen Press, Meghan Klingenberg and Tobin Heath in 2019, Re-inc prioritizes sustainable and eco-friendly clothing — oversized tees, mesh shorts and fleece; and jogging pants, among other items—that are not assigned a particular gender.
"The brand represents the inclusion of all genders and races," said NEA Director Luke Pappas, whose firm is an investor in the company. "Whether you're an athlete or someone with a different job, the brand tries to cater to people of all backgrounds."
The startup continues to expand through live events and new clothing collections, including its RWB (red, white, and blue) line in 2019, the brightly colored Popsicle collection in 2020, and its upcoming Fractals collection.
Skims
Total funding: $159 million, according to PitchBook
What it does: The clothing manufacturer launched by Kim Kardashian West in 2019 makes shapewear, lingerie, loungewear and children's clothing.
Why Investors Love It: Skims differentiated itself early on with its focus on shapewear for a wide range of sizes (XXS to 5X) and skin tones at an affordable price.
Despite some controversy over the company's initial name, "Kimono," and a subsequent rebranding, the social media star and entrepreneur built a business that is clearly resonating with women; particularly those looking for comfortable and minimalist shapewear.
Since its launch in 2018, the brand has gone mainstream. Earlier this year, Skims served as the official underwear and loungewear supplier to Team USA at the Tokyo Olympic and Paralympic Games.
"We're looking for proof of customer love," said Frederic Court, founder of Felix Capital, which is not invested in Skims. “I see a lot of love from customers [with Skims], great feedback from customers. It is evident that they are very inclusive and also deliberative in a category that could be a bit boring.
It helps that Kardashian West often promotes, models and wears Skims herself, both on Instagram and in real life. At this year's Met Gala, Kardashian wore head-to-toe Balenciaga and Skims leggings underneath, according to The Wall Street Journal.
This likely contributed to Skims' ability to raise capital. Kardashian West's brand raised $154 million last April at a valuation of $1.6 billion.
The next project is a high-end collaboration with Fendi, due out later this month.
Ten To One Rum
Full Funding: Undisclosed
What it does: Ten To One, co-owned by Ciara Wilson, hopes to create high-quality rum with modern branding at an affordable price.
Why investors like it: Founded by Trinidadian-born former Starbucks executive Marc Farrell as a tribute to his Caribbean roots in 2019, Ten To One added Ciara as an active co-owner in its latest round of investment last month. She will focus on the company's marketing and business development.
Catharine Dockery of Vice Ventures, which typically invests in alcohol but does not count Ten to One among its portfolio companies, said the rum brand fills a gap in the spirits market, where high-quality rum quality at an affordable price is less available than tequilas or vodkas of similar caliber.
“Their goal is to be the Tito’s in their class,” says Dockery.
For now, the company offers three references: an aged dark rum, a white rum and a 17-year-old reserve in a single barrel. The bottles are sleek and sophisticated, and don't carry the pirate branding favored by companies like Captain Morgan.
Tequila Teremana
Total Funding: Not disclosed
What it does: This Dwayne Johnson brand of spirits makes three types of tequila (blanco, reposado, and añejo) at a relatively affordable price.
Why investors like it: Actor Dwayne Johnson wanted to launch a tequila brand for at least a decade, but it wasn't until March 2020, in the midst of a pandemic, that he finally launched Teremana with spirits veterans Ken Austin and Jenna Fagnan, and her ex-wife and Johnson partner, Dany Garcia.
Handcrafted by a family-run distillery in the mountains of Jalisco, Mexico, Teremana follows in the footsteps of George Clooney's Casamigos tequila company, which sold for a staggering $1 billion in June 2017.
But Clooney has competition. Johnson said that Teremana sold more cases in her first nine months than Casamigos in her first year. Much of that has to do with Johnson himself, who is a box office draw and has a huge following on social media.
The actor markets the products for months or even years before launch, so by the time they go to market they are already part of Johnson's "story," explains Mercedes Bent, a partner at Lightspeed Venture Partners, that does not invest in the brand.
"He's extremely popular, but I think that's because he's very authentic to his motivations and interests, and nothing he produces from a brand or company standpoint feels forced, everything feels extremely natural," Bent said.
Yeezy
Total Funding: N/A
What it does: A line of sneakers and clothing designed by Kanye West, usually made in limited numbers.
Why investors like it: Since West left Nike in 2013 over rights issues (a situation he later described as "heartbreaking") to design sneakers with Adidas, the Yeezy brand has grown in popularity.
Pairs of sneakers sell out almost immediately. The Yeezy 450, which went on sale in March, sold out in a minute.
Worn by the likes of Justin Bieber, Kylie Jenner and the Obamas, Yeezys aren't cheap. A pair of these can cost around $200 and easily exceed $1,000 on resale. It's no surprise, then, that the coveted brand generated $1.7 billion in sales in 2020, according to Forbes.
Earlier this year, Yeezy expanded into apparel through a partnership with Gap.
"[West's reputation] for being an innovator, sort of a push of an envelope... that's kind of what he's known for, and what people gravitate towards what he does, and I think Yeezy is a great example of that," said NEA's Luke Pappas, who is not invested in Yeezy.
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