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Early-Stage Investors Flock to Clean Makeup

Kosas is the latest clean makeup brand to raise money.

With a fresh round of financing, clean makeup brand Kosas has an aggressive growth plan.

The brand, best known for blending skin care and makeup to develop cult products like Tinted Face Oil, $42, has raised a series B round, led by Stripes Group.

Existing big-name investors, including Scooter Braun’s TQ Ventures, Leandra Medine and Abe Cohen, and Arielle and Brandon Charnas, have also re-upped and invested in the latest round of capital. Other series A investors — CircleUp, Beechwood Capital and Imaginary Ventures — also participated in the series B.

Kosas has been growing rapidly. Industry sources said the business was up more than 400 percent for 2019, bringing total retail sales to around $20 million. Projections for 2020 show the business nearly tripling, industry sources said, to between $50 million and $60 million in retail sales.

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Kosas is one of several clean makeup brands to raise capital in the past month.

In December, influencer Annie Lawless’ Lawless Beauty raised a series A from Cult Capital. And earlier in December, Ilia also raised a series B, led by Sandbridge Capital with participation from Silas Capital. While the three brands are relatively small — Kosas is projected to be the biggest of the three in terms of retail sales for 2020 — they are all growing, something the mainstream prestige makeup category has been struggling to do.

“It was a really huge year of growth for us,” said Sheena Yaitanes, who founded Kosas in 2015.

Sephora has been a big part of that picture. Kosas launched there on the Clean at Sephora endcap in all 497 doors in 2019. Toward the end of the year, the brand expanded to its own endcap in 45 doors, and is slated to roll endcaps into 50 more doors in February, Yaitanes said.

With the funding, Kosas plans to keep building up its 26-person team with the addition of a chief marketing officer. The brand will also look to hire sales staff as it grows with Sephora, Yaitanes said. Kosas is also sold at Mecca in Australia, where it will expand its presence, Credo, Goop, The Detox Market and Cult Beauty. The brand is looking to identify a brick-and-mortar retail partner in the U.K. this year, Yaitanes said.

New products are also in the works.

An assortment of Kosas products.

“We’ll continue to innovate both on the color and personal-care side,” Yaitanes said. “We saw that Tinted Face Oil was our number-one bestseller amongst all retailers, including Sephora, and we really felt that the ability for Tinted Face Oil to be a foundation product that provided coverage while benefiting your skin was something that was resonating with people. We were really seeing that there’s a desire for clients to find makeup that enhanced their skin-care journey.”

“We have consistently [heard] that women would love to look polished and not have to take a ton of time doing so,” Yaitanes added.

Next, Kosas is launching a concealer on Feb. 18. “It’s a concealer product that will do what Tinted Face Oil does for your whole skin, but on a more concentrated treatment level for the under eyes and blemishes,” Yaitanes said.

The launch underscores Kosas’ core product philosophy. “It has to be makeup and it has to be skin care and neither one can be compromised,” Yaitanes said. “So, it has to be the best concealer, meaning it has to provide medium to full coverage, it has to blend seamlessly, the colors have to match perfectly, the finish has to be dewy without being tacky — every part of performance has to be met perfectly, and every part of skin care has to be genuinely active in delivering results so that over time, you do see an improvement in your skin.”

Yaitanes declined to give details as to upcoming “personal care” products, but did hint that they will be more in line with the Kosasport LipFuel Hyaluronic Lip Balm.

This spring, Kosas will also open a pop-up in its hometown of Los Angeles, Yaitanes said, and is widening off-line and influencer marketing efforts. Off-line, that means more billboards, subway advertising and wild postings. In influencer land, it means deepening relationships with specific creators.

“It’s about partnering with that influencer to have a deeper relationship with the brand and the product so we can tell brand stories in a way that feels authentic to them…it’s not about them making product for us, it’s about showing the different ways our products can be used,” Yaitanes said.

Kosas’ crop of influencer-investors have so far provided a sounding board for ideas, Yaitanes said. “Those influencers have such wide audiences, they’re very attuned to what is happening in the world, they’re listening every day and oftentimes it’s the first place I go when I have a big decision to make. Having a conversation [with] that group…they’re so ear to the ground they really know what people are talking about,” Yaitanes said.

Stripes, the latest investor in the group, is planning to use expertise from backing other cult Millennial brands, like Reformation and On footwear, as it advises Kosas.

“Standing for something’s really important,” said Karen Kenworthy, partner at Stripes. “The second piece is…maintaining brand integrity and continuing to launch great products from an innovation standpoint…that takes you to the third part, which is just having great product.”

“Sheena’s very compelling force of nature,” said Kenworthy. “She’s created a brand that stands for something really different in a space that I think was really ripe for it.…She’s edgy, she’s a powerful empowered woman, she’s got a lot of energy to her and as a result she’s created a brand in the beauty space that actually exhibits all of those factors.”

Financo advised Kosas on the raise.

See also:

Beauty Predictions for the New Decade, from the NPD Group

The Beauty M&A to Watch for in 2020

P&G Freshens Grooming Segment with Billie 

Beauty’s $1 Billion-Plus M&A Boom