The UpTake: Beauty is ripe for disruption. At least, that’s what the VCs who have watered startups with more than $2 billion since 2009 seem to think. For Madison Reed CEO Amy Errett, stagnation in the hair dye industry opened the way for her startup.
I n tech funding, trends are king. There was a time, in the not so distant past, when anyone with an idea for a social media platform could get VCs flooding in to write them checks. More recently, big data and cloud storage have reigned king. Now it looks like beauty and fashion tech is elbowing into the space and gaining a lot of attention for investors.
More than $2 billion of VC money has flooded this startup sector since 2009, according to National Venture Capital Association, and more than a third of that has found its way to the Bay Area.
So why is now the time for beauty tech companies?
Companies such as Seattle-based Julep, a nail polish mail-order service that has raised more than $50 million, and Birchbox, a New York-based monthly cosmetics service that has raised close to $72 million, have pulled in big bucks to help change the way people buy and discover beauty products. Both companies estimate that beauty and cosmetics is a $160 billion industry tech investors are ready to disrupt.
The traditional companies are slow to adapt to mobile consumers and the importance females as leaders as well as consumers is rising fast.
When you look at the hair dye industry, for example, you can see that the Clairols and L’Oreals of the world have done little to keep up with the changes in commerce driven by millennials and their mobile-centric buying habits.
The CEO of Madison Reed, Amy Errett, saw that stagnation as a way to bring to market a more modern hair care company with a focus on mobile, social and personalized touches.
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