ImpactAlpha, Nov. 11 – Essence Ventures, the investment firm founded by Richelieu Dennis, is leading a $23 million round of financing for Mayvenn, a hair-products platform that taps the distribution power of local stylists.
The large Series B funding may signal investors’ new appreciation for “racial lens investing.” Also participating in the round were earlier investors Andreessen Horowitz, Impact America Fund, and Cross Culture Ventures. Dennis is the owner of Essence Ventures and co-founder of Sundial Brands, the personal-care products company acquired by Unilever last year for an estimated $1.6 billion. (As part of the deal, Sundial and Unilever also launched the New Voices Fund to invest in businesses run by women of color.)
The African American community spends more than $6 billion on hair care products annually, mostly in small shops.
The vast majority of those shops are owned by people outside the community. “All of those dollars flow out of the community and nobody is getting a piece,” says Diishan Imira. So he built Mayvenn to improve how hair extensions for people of color are sourced and sold.
Mayvenn’s platform sources and distributes hair products for stylists, who get a cut of the market by recommending and selling the extensions to customers. The model reduces costs for customers by reducing the number of middle men in the supply chain.
Since participating in the 500 Startups accelerator program in 2013, Mayvenn has generated $80 million in revenue and paid out $20 million in commissions to hairstylists on its platform.
“Investors saw that we had traction and an ownable stake of a large, fragmented market that has been highly overlooked with millions of dollars in buying power who wanted a better way to find and purchase hair,” Imira told Black Enterprise.
With its latest funding, Mayvenn is looking to help customers save more, by selling hair products to them directly and matching them with a stylist. Pairing the services will help customers save about 40% of the normal cost of the extensions and hair installation, Imira says.
Previously Mayvenn raised $10 million from Andreessen Horowitz, Trinity Ventures, Impact America, Cross Culture Ventures and Core Innovation Capital, and a group of athletic and cultural leaders including Serena Williams, Andre Iguodala and Jimmy Iovine.
Mayvenn’s success highlights both the financial and impact potential of businesses driving efficiency and transparency in what Impact America’s Kesha Cash calls “billion-dollar pain points” in overlooked and marginalized communities.
“We’re calling it out as social signaling, so that folks see that our companies are successful because of their diversity,” Cash said at last month’s SOCAP conference.
It also provides a proof point for financial and impact appeal of the creative economy, says Laura Callanan, the founder of Upstart Co-Lab. Callanan says Mayvenn’s new deal shows that “diverse cultural leaders are at the edge of new markets, trends and customer demographics — and that women entrepreneurs and entrepreneurs of color have an on-ramp to opportunities in the creative economy. ”