Venture capitalists are now getting involved in women’s hair.
Madison Reed launched publicly today and revealed $12 million in backing from well-known VC firms. The company makes at-home hair coloring kits for women and sells them through its online store.
Why might hair dye attract the attention of tech venture capital firms? VentureBeat chatted with Jeff Crowe, a managing partner at Norwest Venture Partners, which led this round, to find out.
“We especially like companies that offer high quality products, deploy cutting edge online marketing, and enable a superior customer experience. In our view, Madison Reed checks all those boxes,” Crowe said. “This use of technology to ensure a highly satisfactory hair coloring experience is completely novel within the hair color industry and will present a real challenge to the old line competitors who have dominated the space for decades.”
Madison Reed’s $29.95 hair coloring kits come with color activators, shampoo, conditioner, cream, caps, and cleansing wipes. The company said all its products are salon-grade, made with high quality materials, and don’t contain harmful chemicals.
The site has a “color advisor” feature to help women find the right kit for them, or they can match their current hair dye brand to one of Madison Reed’s products. They can also do a live web chat, digital photo consultation, or speak with a trained colorist on the phone if they have additional questions.
You can buy once or set up recurring deliveries. And Madison Reed’s mobile app has instructional videos for applying the color.
Market research firm IBISWorld found that hair color is the largest, fastest-growing major category of salon products, a $10 billion industry. More than 50 percent of women color their hair and spend an average of $330 on this annually. The existing options for hair coloring are primarily expensive (and lengthy) salon visits, or at-home treatments with chemical-filled dyes from drugstores.
Madison Reed aims to strike a balance between the quality and trust in salons with the affordability and convenience of home-coloring.
Madison Reed is a part of the growing trend of direct-to-consumer retail. Rather than paying for physical stores, finding distribution partners, and dealing with inventory issues, a new wave of e-commerce startups are choosing to sell directly to consumers via the Internet. By cutting out the middlemen and simplifying the supply chain, companies like Bonobos, Warby Parker, Lululemon, Julep, and Madison Reed can operate more efficiently and sell their products at a lower price.
The company said its hair coloring formula was created by salon experts with more than 30 years of experience. At launch it features 27 shades that have undergone 2,000 hair tests on models.
For many women, hair color affects how they feel and their confidence. Whether its covering up gray hairs, seeing if blondes really do have more fun, or expressing your new dark outlook on life, dying hair is something millions of women do at some point in their life, and some do it every month.
Crowe said Madison Reed’s long-term vision is to create a major direct-to-consumer brand in the health and beauty category and expand beyond hair coloring into shampoo, conditioner, and more.
Madison Reed founder Amy Errett previously worked in a senior management position at E*Trade, served as CEO of lifestyle company Olivia, and then joined as a partner at Maveron Ventures, another one of Madison Reed’s investors along with True Ventures.
This brings Madison Reed’s total capital raised to $15.9 million.