LOS ANGELES — Bellami Hair struck a deal with private equity firm Cathexis Holdings LLP for $20 million in exchange for a minority stake in the hair extension firm as it hits the green light on growth.
The company, with a business that includes hair extensions and six hybrid salon-retail store concepts, has another $100 million to work with from Cathexis available on an as-needed basis as it works through a five-year growth strategy, according to Bellami ceo Julius Salerno. He cofounded the business with Nikki Eslami in 2012.
The deal with Cathexis marks the first time the two have taken outside funding after launching the business with $7,000.
Bellami’s seen rapid growth, specifically between the tail end of 2017 and into this year when it opened five of its six store concepts.
“It’s the right time [for outside capital] because we just launched an entirely new collection being Bellami Professional, which continues to be our largest focus we’re going to have moving forward,” Salerno said. “The size of the opportunity in that particular category of permanent extensions, we knew we were going to need quite a bit more inventory to satisfy the demand that we had. We knew we could fund it ourselves if we wanted to expand gradually, but we thought we’d be able to achieve it a lot more quickly and execute on the opportunity with the funding available.”
Bellami Professional, which was launched this year, is both a product line but also educational offerings for stylists. The company initially started out as a brand directed at the average consumer, which accounts for the majority of its business. But there’s a real opportunity to now grow revenue generated from the professional end of the spectrum, according to Salerno.
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More products within Bellami Professional are expected in the near term. The Cathexis capital will also be used to grow the footprint of the physical locations. Salerno said the company will open doors both domestically and internationally in markets such as Atlanta, Chicago, Phoenix and potentially New Jersey and Orlando. Outside the U.S., there’s Toronto, Montreal, Australia and the U.K. By the end of 2020, Salerno estimated the company should have between 12 and 15 locations open. The company operates its Beauty Bars in Los Angeles, Houston, Miami, New York, Vancouver and the recently opened Las Vegas door.
“The main intention was never to be in the salon business,” Salerno said of the physical locations. “It was more so to be retail and, essentially, what they were designed for was to be locations where we could do our certification education courses for Bellami Professional, but also to act as major distribution points for not only the consumer side but also stylists and salons that want to purchase the product for their clients.”
The business has historically worked with influencers, such as Kylie Jenner and Guy Tang, to help build brand buzz. That work will continue to be important, but it’s a balance where the actual product should never take a backseat, the ceo pointed out.
“It’s [influencers] been obviously very impactful, but the world of influencers is continuously changing and you’ve got to adjust with that,” Salerno said. “You’ve obviously got to use more creative ways in reaching your target demographic and influencers have been and will continue to be a great resource there to achieve that. But the focus for us will always be more on product quality and product innovation rather than just doing collaborations. So we’re definitely going to be focused on the innovation side of things in bringing products to market.”