CurlMix, a Black-owned hair care subscription company, has raised more than $5 million in equity crowdfunding. More than 8,500 investors have participated in this campaign just two years after CurlMix founders Kim and Tim Lewis declined an investment offer from Robert Herjavec on Shark Tank.
Since its inception in 2015, CurlMix has generated more than $13 million in revenue and anticipates an additional $10 million this year.
The subscription company is currently valued at $25.5 million pre-money valuation, according to the crowdfunding campaign, and this will likely increase once investments close.
SUBTA was able to sit down with CEO & Co-Founder Kim Lewis to learn more about the future of CurlMix and what inspired the couple to decline Shark Tank’s investment and venture out on their own search for funds.
The History & Future of CurlMix
CurlMix was founded in 2015 as a do-it-yourself hair care subscription box. Customers made their own hair products from the ingredients delivered to their doorstep. When the subscription started to become stagnant, Kim and Tim decided to pivot the contents of their boxes.
After consulting their advisor from Backstage Capital, who is also an investor, the couple took their best-selling hair care formula and revamped CurlMix as its own product line. They were the first flaxseed gel providers in the market. By 2018, their new ready-made products reached $1 million in sales.
The Lewises went on Shark Tank in 2019 to pitch CurlMix, seeking a $400,000 investment in exchange for a 10% stake in the company. They would not accept more than a 15% stake, according to Afrotech. Additional funding would have been necessary and, after securing the money they needed, they would have owned less than half of their company — an option that was inconceivable for the business-savvy couple.
When Herjavec offered $400,000 with a 20% stake, they refused. “It’s tough turning down half-a-million dollars,” Tim told The Jam TV Show. “We’re worth more than that and we’re growing to a billion dollars one day.”
Now, customers can buy one-off products or purchase a monthly subscription, which makes up 20% of CurlMix’s business revenue, Kim told SUBTA. CurlMix projects $10 million in revenue this year, and she expects her company to reach $40 million in revenue by 2024.
For brands considering making an appearance on Shark Tank, Kim advises to pitch in every free competition possible. Before her appearance on the show, she pitched CurlMix in 20 different competitions without a win. This experience gave her the opportunity to perfect her business pitch and “practice until I was blue in the face,” Kim said.
Equity Crowdfunding Attracts Loyalty and Financial Support
Typically, when a company is raising funds, it is from established, wealthy investors who can afford to invest in the business. Equity crowdfunding democratizes that process and opens the doors for anyone to invest. The process allows companies not listed on the stock market to seek investments in exchange for company shares.
There are several equity crowdfunding platforms that connect companies with investors online. For its campaign, CurlMix began leveraging WeFunder’s services for crowdfunding last April to expand its community’s involvement in the business.
“I wanted our customers to be happy with the growth of the business,” Kim told SUBTA. “I wanted our customers to feel a part of any future decisions, I wanted them to really be empowered in ownership of the company.”
Kim considered using crowdfunding for a long time but the maximum amount a company could raise in a 12-month period was too low. Once regulations increased the maximum to $5 million this past March, Kim jumped at the opportunity. “Now I can do it in a way that makes sense for my business but also I can give my customers the chance to own a piece of the pie,” Kim told SUBTA.
Investors receive various immediate perks depending on how much they invest and eventually receive a payout once CurlMix files for an initial public offering. Kim’s crowdfunding strategy increases the value of her company and helps build a trustworthy relationship with her customers.
For example, investments of $250-$500 will get investors a free CurlMix tote with their next online purchase on the site. Investments of $50,000+ are rewarded with a tour of the headquarters, a one-on-one Zoom call with the founders, and a free full-size Wash + Go Kit with their next online purchase.
CurlMix is the first Black-owned beauty brand to ever use equity crowdfunding. Kim will use the funds to put emphasis on content and influencer marketing by launching multiple brands and partnering with traditional brick-and-mortar retailers like Sephora, Target, and Ulta.
In doing this, customer acquisition costs (CAC) — currently at $17 — will significantly decrease, and as a result, improve the customer Lifetime Value (LTV). As of February 2021, CurlMix’s LTV is $111 and steadily growing, the campaign reports.
Additionally, Kim hopes to one day be the first Black-owned personal and household care organization — similar to Procter & Gamble, she says.
Kim’s ambition pushed her to go beyond CurlMix. Last fall, she launched 4C ONLY, the first and only brand dedicated to 4C hair (the tightest and most coil curl-like hair type). It’s on track to reach more than $1 million in revenue this year. Now, Kim is looking to launch another brand that focuses on overlooked segments in the market, such as women over the age of 50, and wellness.
“A lot of products are ignored for them,” she told SUBTA.
As a young subscription entrepreneur, Kim has learned the ins and outs of what it takes to secure investment in a company, especially the disparities of investment for Black-owned companies. Other Black-owned businesses should follow in her footsteps and leverage equity crowdfunding, Kim told SUBTA.
“The difference between you getting an investment and not, is not having a great business,” Kim told SUBTA. “It’s someone else’s bias and whether or not they feel like they know your market.”
CurlMix had a loyal customer base of 100,000+, and Kim knew they would want to invest. Within four hours of launching the crowdfunding campaign, CurlMix reached $1 million.
Further advice that Kim offers Black and brown founders: “Get your accounting in order.”
“A lot of times, we don’t focus on accounting money because we focus on making it,” she told SUBTA. “Understanding the accounting processes partnered with equity crowdfunding will set your start up business up for success.”
Key Takeaways:
- CurlMix raised more than $5 million in equity crowdfunding after refusing a $400,000 offer on Shark Tank.
- The company projects to make $10 million in revenue this year.
- By 2024, the company expects to reach $40 million in revenue.
- Twenty percent of CurlMix’s business revenue is subscription based.
- CurlMix is the first Black-owned beauty brand to ever facilitate equity crowdfunding.
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