Hair color innovator Madison Reed has raised a $50 million financing round to continue to fuel its omnichannel expansion and build on the 130 percent growth it saw during 2020. The round was led by True Ventures, an investor in Peloton, Ring and Blue Bottle Coffee. The round includes participation from previous investors Norwest Venture Partners, Comcast Ventures and SheaVentures. New investors include Goldman Sachs, Motley Fool Ventures, Portfolia Rising America Fund and Portfolia FirstStep Fund.
Amy Errett, the founder and CEO of Madison Reed, and Lorine Pendleton, the lead investor of Portfolia Rising America Fund and one of Mergers & Acquisitions’ Top 25 Most Influential Women in Mid-Market M&A, spoke with the publication’s editor-in-chief Mary Kathleen Flynn in a fireside chat at M&A’s Most Influential Women Speak event on Feb. 24.
“A great founder, a great idea and a huge market was incredibly appealing,” said Pendleton summarizing the decision to invest.
Madison Reed, which has raised a total of $199.5 million, says it has been transforming the hair color industry with its commitment to making salon gorgeous hair color made with a Smart 8-Free formula. The brand’s hair color is both affordable and easily accessible online at Madison-Reed.com, Ulta Beauty, and in Madison Reed Hair Color Bars nationwide, claims the company.
The company experienced 130 percent growth in 2020 and its customer base nearly doubled. During the peak of the Covid-19 surge, consumers bought the brand’s hair color kits every 5 seconds. To meet further demand and seize the moment, the company launched two new products: Madison Reed MR., the brand’s hair color line for men, and Color Therapy, a color-depositing hair mask. In addition, the brand opened 16 new Hair Color Bars.
“What 2020 demonstrated is something we’ve always known: hair color is a category that is essential to every woman,” said Errett in a statement. “Our business surged as hundreds of thousands of customers across the country turned to a brand they could trust to deliver salon-gorgeous results with a formula made with ingredients they could feel good about.”
“We believe consumer behaviors have changed forever and this category is in the epicenter of that change,” added Errett. Madison Reed has continued to offer product and technology breakthroughs, including 1:1 hair color consultations via video with expert colorists as well as a new educational concept called “Hair Color House Parties” that uses Zoom to teach consumers how to color their hair, live, from licensed Madison Reed colorists.
Madison Reed started as a direct-to-consumer business and expanded with a wholesale relationship at Ulta Beauty as well as a growing number of retail locations called Hair Color Bars. Today, the company says it is a full omnichannel business which gives customers the freedom to color their hair how they want, where they want: at home on their own schedule, or by visiting a Hair Color Bar where they can get their color applied by a colorist with the same great Madison Reed products. The company operates over 30 four-wall locations in a dozen major metro areas. The brand expects to have 60 Hair Color Bars by the end of 2021.
“Amy and the entire Madison Reed team have been laser focused on the changing dynamics of consumer preferences,” said Jon Callaghan, co-founder of True Ventures. In addition to investing in Madison Reed with its third core venture fund, True has invested in the company with all four of its Select Funds, which are designed to propel high-growth True portfolio companies of exceptional promise. “Madison Reed has brought transparency to a category begging for it while growing its unique, inclusive, and representatively diverse team internally. Millions of people have benefited from this better, higher quality hair color and care while recreating what their lives look like at home. We’re staying all in with Amy and her team as they continue to show up for consumers in an omnichannel way.”