(Bloomberg) — Madison Reed Inc. announced a $33 million investment led by Sandbridge Capital, with participation from media mogul Jay-Z’s Marcy Venture Partners.
The company plans to use the new capital to add 20 retail locations and 850 licensed colorists in key hubs including New York City, South Florida, California, Chicago, Washington D.C. and Texas, according to a statement. It’s also seeking to boost its digital business, and in March hired Dollar Shave Club’s Jose Zuniga as chief financial officer.
Founded in 2013 in San Francisco, the company operates 60 hair salons across the U.S., with services ranging from roots coverage to high-end highlighting called balayage. Madison Reed’s hair color products are sold at Ulta, Ulta at Target, on Amazon, by other retailers, and on its website. The company also has a subscription business. The Series G funding brings the company’s total capital raised to about $220 million.
On marketing campaigns, the company has worked with influencers, including reality TV star Kyle Richards of “The Real Housewives of Beverly Hills,” and the celebrity hairstylist for Jessica Chastain, whose hair was glossed with Madison Reed for the Oscars, according to the company.
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Founder and Chief Executive Officer Amy Errett declined to comment on the company’s valuation, but the research firm Pitchbook pegged it at $568 million last September.
The venture capital industry as a whole has been increasing its Series F and G investments, with hundreds of millions of dollars being raised per round, according to Pitchbook. But Errett said her main goal in taking the $33 million investment was to add the expertise of Sandbridge Capital, which has backed consumer companies like The RealReal and Bonobos, and Marcy Ventures, which is an investor in Savage x Fenty and Gopuff, according to Crunchbase. Both investment firms are taking board observer seats at Madison Reed.
“I’m not in the business of raising tons of money if I don’t need to,” said Errett, who is also a venture partner at True Ventures, one of Madison Reed’s board members and its earliest investor. “I’m in the business of raising enough money so that the company can operate and grow. We have a very significant base of business that generates top line revenue.”
Errett explained that while the number of stores grew fivefold during the pandemic, they can take some time to become profitable. Still, she’s confident the company is on the right path.
“Our biggest challenge now is staffing,” she said. “We’ve also had to get very nimble about sourcing from multiple vendors,” Errett added, citing shortages of gloves and boxes.
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