Hair colour company Madison Reed, which saw an influx of new customers in the early days of the pandemic, raised $33 million in a new funding round. The money will be used to help the brand build a diversified future, ramping up its brick-and-mortar business, as well as creating new products and forging new partner relationships.
The round, which brings Madison Reed’s total amount of money raised to $250 million, was led by Los Angeles-based investment firm Sandbridge Capital with participation from Marcy Venture Partners. Madison Reed does not disclose valuation, but was reported in September 2021, just after their last funding round, to be in the range of $500 million to $1 billion. With the new round, the valuation is likely closer to the latter.
Though the pandemic provided the brand with a boost, even as salon doors have reopened, Madison Reed’s upward trajectory has continued, benefitting from a boom in interest in prestige hair care, with consumers seeking out hair care options with innovative ingredients at higher price points, according to Larissa Jensen, beauty industry advisor at market research firm NPD.
“We accelerated the number of customers that might otherwise not have come to us at the time that they did, when things were in lockdown, and they stayed,” said Madison Reed chief executive Amy Errett. “No matter what happens, she’s going to colour her hair. I used to say, ‘Hurricane, earthquake, it doesn’t matter.’ Now, I can add pandemic.”
Since 2020, Madison Reed has been heavily investing in building up its brick-and-mortar presence with its salon locations, known as Madison Reed Colour Bars. There, consumers can either have professionals dye their hair using Madison Reed products or buy the products for use at home. At the start of 2020, the brand operated 12 Colour Bars. Today, that number is 60, and Errett said that this new funding round will be used in part to grow that number further, with 20 more openings planned for this year. Colour Bars are currently located in or around metropolitan areas like New York, Atlanta, Dallas and more, and the company is targeting further expansion in “major hubs” including Chicago, Texas, South Florida and Washington, D.C. Along with the Colour Bar openings, the brand is looking to hire 850 colourists in 2022.
The pandemic ultimately ended up having a net positive impact for Madison Reed’s brick-and-mortar business, said Errett, as there were more storefront locations available and greater flexibility with leases.
Errett said that going forward, Madison Reed’s overarching strategy will be led by the goal of getting product into consumer hands — or rather, on to consumer heads — no matter where they’re located. For those without a Colour Bar nearby, that means either through the brand’s direct-to-consumer channels or at retail partner Ulta. The guiding thought, Errett said, is that if the product is good enough, then consumers will seek it out. The brand, in turn, needs to make sure that consumers will have an easy time finding it when they do.
“This business will succeed or fail based on the efficacy and the quality of our hair colour,” said Errett. “This is not a category that you can fake your way through.”