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Commercial and cultural leadership by this founder community – 91% Black women – grew the U.S. economy via sales, retail traffic, jobs and new products, from beauty AI to skincare, says the 2024 Economic Advancement Report by BrainTrust Founders Studio
By Kendra Bracken-Ferguson and Lisa Stone
Last year, Americans of all races and ethnicities purchased more than $142 million in new beauty and wellness products created by a community of Black entrepreneurs and sold by national retailers, according to the 2024 Economic Advancement Report by BrainTrust Founders Studio.
In the last 12 months, the robust U.S. beauty and wellness industry grew again1 and overall venture funding to Black founders declined again, to less than one-half of one percent.2 During this period, the BrainTrust Founders Studio nearly doubled our membership of Black-founded beauty and wellness companies. These 209 founders – 91% Black women – collectively achieved nearly $142.6 million in sales, up 42.5% from the prior year, selling 39,000+ product SKUs3 across more than 47,000 retail “doors” and online. And while 25 of these founders have successfully raised $114.9 million in venture capital or angel investment since inception, venture-backed companies drove just 69% or $98.5 million of sales.
Who bought these products? The shortest answer is “everyone.” With the exception of products aimed at one solution, i.e., Black hair care, customer demographics mirror the social media followers of Black founders and their brands, and collectively identify as Asian, Black, Caucasian and Hispanic.
Collective sales by our 209 member companies exceeded $142 million in the last twelve months,5 up 42.5% from $100+ million in sales by 116 members last year. Of BrainTrust Founders Studio member companies, 10% report revenues of $1+ million to $25 million, 20% report revenues of $10,000 to $1 million, and 70% of member companies are at the pre-revenue or “start” phase.
Participants in the 2024 Economic Advancement Report employ 332 people full-time and thousands of contractors, many in field retail sales. The majority of these full-time jobs – 112 – are held by highly trained stylists at Pressed Roots, a luxury salon for textured hair founded and led by CEO Piersten Gaines. The company’s specialty is a $75 hair blowout that takes 1-2 hours; each salon is profitable within the first year, Gaines said.
1. What’s the secret to Pressed Roots success?
“Consistency. Our guests know exactly what they are going to get every single time. It's hard to find that in the service industry, especially when it comes to natural hair care, given there is no standard education for this hair type. We focus on our training and continued education to ensure that our service level and expertise is consistent across stylists and locations.”
2. What do you want to be known for as an entrepreneur and a CEO?
“I'd like to be known for reimagining the beauty services space. For decades, women of color have been an afterthought in this space, especially when it comes to luxury beauty services. I would like Pressed Roots to highlight the value that this demographic brings to the industry so that entrepreneurs, corporations, and brands begin to create products and services with them in mind.”
- Piersten Gaines, Founder and CEO, Pressed Roots. Source: Email Q&A.
Our inaugural 2023 Economic Advancement Report confirmed Black founders were emerging as this industry’s next generation of entrepreneurs, led by Black women who have long been the beauty and wellness industry’s most valuable customers.6 This trend accelerated in year two of our report, as studio members confirmed significant and growing racial diversity among their customers. The BrainTrust Founders Studio does not reveal company-specific information, but we can confirm based on 41 fields of data tracked for each member that the collective social media following of studio founders and brands reflects their customers.
CreatorIQ, a comprehensive creator marketing platform founded by CEO Igor Vaks, provided a third-party assessment of all participating BrainTrust Studio founders and brands:
The number of product SKUs marketed by studio members exploded in 2023 to 39,000, up from more than 4,000 from the prior year. That massive increase is due in large part to Thirteen Lune, led by Co-founders Nyakio Grieco and Patrick Herning, whose U.S. business includes a growing consignment retail line that operates “shop in shops” inside all JCPenney department stores as well as a standalone flagship in Los Angeles. These Thirteen Lune shops specialize in “the beauty of inclusion,” offering 90% BIPOC-led brands and 10% ally brands; its best-selling brand is “Relevant,” private label skincare, fragrance and color cosmetics founded by Ms. Grieco. Even without Thirteen Lune’s leadership, Black founders reported marketing 72%+ more product SKUs last year.
As retailers compete for customers, virtual “try-ons” helping digital users test color cosmetic products on their own faces have become ubiquitous. Now some retailers are expanding to other categories, like hair: Myavana Founder and CEO Candace Mitchell Harris and Ulta Beauty announced Feb. 1, 2024,8 that Ulta had integrated Myavana’s HairAI™ tech within the retailer’s virtual try-on GLAMlab to deliver personalized product recommendations based on instant hair type analysis for customers.
"In the beginning at MYAVANA, we set out on a mission to transform the hair industry through science and technology and I am ecstatic to partner with Ulta Beauty to begin this digital transformation in retail. Through our personalized hair care technology that will innovate and elevate our shopping experiences, we're excited to bring to market better identification and understanding of our unique hair strands and unique hair journeys while partnering with the nation's largest beauty retailer that prioritizes innovation and inclusion.”
Candace Mitchell Harris, Founder and CEO, Myavana. Source: PRNewswire.
A growing number of national brick and mortar retailers also distributed and sold products created by BrainTrust Founders Studio members, including but not limited to Amazon, CVS, JCPenney, Macys, Nordstrom, Sephora, Target, Ulta Beauty, Walgreens and Walmart. The number of retail “doors” selling products shipped by studio members last year more than doubled to 47,000+, up from 23,000+ the prior year.
Despite the anti-DEI movement driving litigation and collecting headlines since the Supreme Court ruled against affirmative action programs in higher education in August,9 many national retailers, from brick-and-mortar to direct-to-consumer (DTC) online, have continued to actively pursue partnerships with BrainTrust Founders Studio members to expand consumer service and product catalogs. Beauty of Fashion (BOF) reported on industry public relations and practices:
“While some companies are backing away from diversity, equity and inclusion efforts amid a conservative backlash, others are finding clever new approaches to meeting their original goals. An October report by the Association of Corporate Citizenship Professionals, a trade organisation [sic]...found in a survey that 86 percent of its members had changed the way they talk about their work publicly, or have reduced external communications. But only 9 percent reported a decrease in commitment to DEI itself.
'If companies need motivation to push through all this, they should think about their future customers — most of whom are likely to be ethnically-diverse, [Porter Braswell, founder and CEO of 2045 Studio, a membership network for BIPOC professionals] said. “ ‘It’s undeniable that by the year 2045, this would be a majority racially-diverse United States. So if fashion brands — more than any [other industry] — don’t understand the changing consumer demands and habits and have a workforce that’s reflective of those changes and makes products for those changes — they will be irrelevant.’ ”
BOF, “How Fashion Is Adapting To The Diversity Backlash” by Sheena Butler-Young, 2.8.2024 10
BOF’s report notes that by 2045 the majority of American consumers will be “BIPOC.” The acronym, short for Black, Indigenous and people of color, is often used to describe the number of Americans who identify as belonging to two or more races, which more than tripled from 2010 to 2020, expanding from 9 million people to 33.8 million or about 10% of the U.S. population.11 These young Americans of all races and ethnicities continue to shop their values at a scale that speaks to a permanent shift, not a fad, especially now that self care has been added to beauty and wellness: Mintel's Diversity and Inclusivity in Beauty – U.S., 2021 Report showed that 30% of adults aged 18-24 have sought out beauty brands that promote diversity, compared to just 21% overall.12 Statista's “Consumer D&I Report”concluded that 31% of millennials consider diversity and inclusion the top beauty brand value.13
Since the Supreme Court decision, some retail market analysts have directly correlated company financial performance with shopper responses to inclusive corporate and in-store cultures, such as this analysis of Ulta Beauty by Abbey Cook, a portfolio manager with Fairlight Capital Management:
“In addition to exceptional financial performance, what makes this beauty retailer shine is a true people-first culture, providing a moat we believe is widening over time and difficult for competitors to replicate...While every corporation has a set of values listed on their website, Ulta’s corporate behaviours and actions clearly demonstrate a culture that is permeating all organisational levels. Values of diversity and inclusion are modelled by top leadership where the Board and the C-suite are majority female-led and racially diverse...Where “helping others” is the baseline at Ulta, reciprocation can occur fluidly across the organisation, and the people-first culture supports [sales] associates feelings of value, acceptance and empowerment. A “cultural flywheel” is produced, where associates’ are well-positioned to create an engaging, inclusive and positive store environment. In turn, Ulta’s guests have reciprocated, driving consistent traffic growth, membership growth and retention, ultimately translating into high store productivity, sales and market share.”
Fairlight Capital Management, “Ulta’s beautiful culture: a durable competitive advantage,” by Abbey Cook, 12.14.202314
In 2023, the anti-DEI backlash described above combined with the bear market in venture funding to disproportionately and negatively affect Black-led venture funds and Black founders alike15 – despite the steady stream of data that diverse investment teams drive better returns.16 We estimate that 10% of our members delayed fundraising to avoid diluting their ownership of their companies, despite already having revenues of $500,000 to $5 million. Instead, founders focused on scaling revenue, operating efficiently and improving relationships with retailers interested in Black-led brands (see Retail leadership, above). This decline makes leadership by limited partners who invest in funds like the BrainTrust Fund even more important. Our fund’s accredited investor community resembles beauty and wellness shoppers by design: Most identify as women (77%) and BIPOC (76%), and all are experienced leaders in today's consumer marketplace, from beauty, wellness, and consumer packaged goods, to e-commerce, marketing, media, and funding and growing startups.
Of the 209 members of the BrainTrust Founders Studio, 25 founders have successfully raised approximately $114.9 million in venture capital or angel investment since inception. Of that amount, more than $112 million or 97.6% is concentrated in 11 companies. These venture-backed companies drove 69% or $98.5 million of sales reported in the 2024 Economic Advancement Report. The remaining 31% or $44 million in sales were bootstrapped by founder-led business development, and a varying combination of grants, pitch competitions, loans, lines of credit and, occasionally, personal debt.
The ability for Black founders to make an impact – from a founder’s own bank account and family to the larger Black community and American society – is an ongoing conversation among BrainTrust Founders Studio members. Co-founder and CEO Kim Lewis of CurlMix, a BrainTrust Founders Studio member and BrainTrust Fund I investment, was recently interviewed by Noozi Nwanji for Afrotech.17 One of the topics Lewis addressed was community backlash faced by Black founders who successfully sell a company, as seen with Monique Rodriguez, who sold Mielle Organics to Procter & Gamble for $640 million,18 and Beatrice Dixon, who announced a $380 million partnership between her company, The Honey Pot, and majority stakeholder Compass Diversified:19
“We think that you’re supposed to hold on to these businesses for 50 to 100 years, and that’s not how Black wealth is made. Black wealth is made by buying and selling companies.” [Lewis] added, “People don’t realize that companies either sell or die. Would you rather them die to say that it was still 100% Black-owned? No, you want them to have big exits so that then they can come back and pour into the community, which they often do. …People think that founders are rich, and we’re not rich. Many founders are living paycheck to paycheck, and they don’t actually get their big payday until they sell. And then that’s when they can actually impact the community and help people.”
Kim Lewis, Co-founder/CEO, CurlMix to Noozi Nwanji, Afrotech, 2.15.2024
These data further prove Black entrepreneurs create beauty and wellness products that everyone buys. Despite the fact that venture funding to Black founders has fallen to a three-year low,20 despite the true obstacles and challenges entrepreneurs face in starting and leading companies, the 2024 Economic Advancement Report confirms Black beauty and wellness entrepreneurs are growing the American economy with new, innovative products and services that drive sales by leading retailers, online and in-store, and create jobs. We invite you to join us in celebrating this commercial and cultural leadership by our members, the grand majority of whom are Black women!
As we conclude Black History Month 2024 and head into Women’s History Month 2024, we wanted to share a message (or three) of encouragement to other underrepresented entrepreneurs with big ideas in beauty and wellness, and an invitation to allies who want to collaborate and join this community:
Join the BrainTrust Founders Studio
Whether you are an entrepreneur yourself or want to work with entrepreneurs, the opportunity is ripe now to create sustainable, generational inheritance in the growing beauty and wellness industry. We hope to see you there!
BrainTrust Founders Studio, the largest membership-based platform for Black founders of beauty and wellness companies, is led by Founder/CEO Kendra Bracken-Ferguson and Co-founder/Chief Investment Officer Lisa Stone, who together are general partners in the BrainTrust Fund. Venture Analyst Ryan Pierce also contributed to this report.
For more information please contact founders@thebraintrust.com.
For press or requests for interview, please contact press@thebraintrust.com.
SOURCES
3. “A stock-keeping unit (SKU) is a scannable barcode, most often seen printed on product labels in a retail store.” Source: Investopedia.
4. The exception: Products targeted at specific solutions, i.e., Black hair care.
5. https://www.braintrustfoundersstudio.com/economic-advancement-report
7. https://www.creatoriq.com/. Excludes products aimed exclusively at Black hair care.
9. https://www.scotusblog.com/2023/06/supreme-court-strikes-down-affirmative-action-programs-in-college-admissions/; https://www.nytimes.com/2024/01/22/business/diversity-backlash-fortune-500-companies.html
12. https://store.mintel.com/report/us-diversity-and-inclusivity-in-beauty-market-report-2021
14. https://www.livewiremarkets.com/wires/ulta-s-beautiful-culture-a-durable-competitive-advantage
15. https://techcrunch.com/2024/01/17/funding-black-founders-down-in-2023
17. https://afrotech.com/curlmix-new-crowdfunding-campaign
18. https://finance.yahoo.com/news/monique-rodriguez-opens-her-decision-190610199.html, https://pitchbook.com/
20. https://techcrunch.com/2024/01/17/funding-black-founders-down-in-2023
22. https://www.investopedia.com/terms/b/bootstrapping.asp
