What $100 Million in New Funding Means for Ipsy, Michelle Phan's Beauty Box Startup
Ipsy, the beauty subscription startup co-founded by YouTube prodigy Michelle Phan, has long been nipping at the heels of industry forebearer Birchbox. But while Birchbox has raised $72 million to help fuel its growth, Ipsy executives have said that its own growth has mostly been a byproduct of Phan's massive social reach.
That all changed on Monday when the San Francisco-based outfit announced a gobstopping $100 million Series B funding round -- courtesy of TPG Growth and Sherpa Capital -- which is reported to value the company at $800 million. Ipsy had previously raised just under $3 million.
From Ipsy’s perspective, the round wasn’t totally about money, says president Jennifer Goldfarb. She said that the company has been profitable for the past three years and counts over 1.5 million subscribers and $150 million in annual revenue. Rather, in TPG and Sherpa, the team saw strategic thought partners with connections and experience in the worlds of beauty and media -- a crossroads at which Ipsy is thriving.
Such connections could materialize in the form of additional beauty brands added to Ipsy’s $10 Glam Bags -- the company’s flagship offering, which are filled with five sample-sized products every month. Additionally, Ipsy could harness entertainment industry connections to amp up its network of 10,000 digital influencers, who promote the service among their legions of followers on YouTube and Instagram.
“Women are wanting less and less an authoritative perspective. They want something that’s personal, they want to follow someone’s advice who they really connect with,” Goldfarb says of Ipsy’s roots in the social influencer community. This is what differentiates the company from competitors, she says, including a forthcoming subscription service from Sephora called Play!
And being that content is central to Ipsy’s mission, Goldfarb says the 3-year-old company plans to pour funds back into its creator community. For instance, Ipsy launched OpenStudios last May, a 10,000-square-foot fully-equipped production studio in Santa Monica, Calif. -- with an accompanying suite of mobile apps -- that is available to creators for free. Future investments could comprise more facilities or more apps, Goldfarb said.