Madison Reed CEO Amy Errett had lunch yesterday with dozens of her employees in the San Francisco’s Mission District to talk about how her start-up will storm the barricades of the $50 billion hair-care market, with some help from Comcast Ventures.
The cable giant’s venture arm was the lead investor in Madison Reed’s latest financing round, helping raise $25 million for about two dozen Color Bars — sleek hair salons — to add to Madison Reed’s products sold mostly online. The Color Bars are expected to open by the end of 2019. There are now two Color Bars, in New York and San Francisco.
“What I was talking about today was what it’s like today” with about 100 employees “and what it will be like when we hire 400 people for our Color Bars,” Errett said. Ninety-five million American women color their hair every six weeks — a huge market — but there has been little innovation in the market for those products, dominated by companies such as L’Oreal and Procter & Gamble, in decades, Errett said.
Madison Reed’s potential market is women between the ages of 35 and 75. “Even women in their 60s know how to shop online,” Errett said. Fifty-two percent of women color their hair at home, a product served by Madison Reed’s online sales. The remaining 48 percent of women color their hair at salons. The Color Bars aims to serve those customers.
Traditional hair-products giants are beholden to brick-and-mortar stores and are late to sell their products aggressively online, Errett said. So far, Madison Reed, which was launched in 2014, has raised $70 million. It markets its hair products as being free of ammonia, resorcinol, parabens, phthalates, and other potentially harmful ingredients and being “delivered to your door.”
Comcast Venture has been investing in digital start-ups such as MealPal and Dollar Shave Club. The research firm CB Insights has ranked Comcast Ventures as the nation’s No. 4 corporate start-up investor since 2011, with stakes in 105 early-stage companies that carry a combined valuation of billions of dollars. CB Insights says that the only U.S. companies with more start-up investments are three Silicon Valley giants: Google (286), Intel Corp. (207), and Salesforce.com (124). The Comcast venture arm has offices in San Francisco, Philadelphia, and New York.
Sam Landman, Comcast Ventures’ managing director, said: “We have watched the growth and execution, and we wanted to be a larger investment partner to the company as they scale and add Color Bars to their already fast-growing business. We are delighted to lead this round and look forward to the continued growth and success.”