We may or may not be a little bit obsessed with Lizzo and every single beauty moment she posts on’ gram and TikTok. Somehow, in the midst of performing around the world, the pop and people of color still experience today.”
Black entrepreneurs start with, on average, $35,000 in capital compared to $107,000 for their white counterparts, according to a recent McKinsey report. Lack of access to capital also hurts black entrepreneurs in the long run. The State of Black Entrepreneurship in America report from the Congressional Black Caucus Foundation in 2019 found that black entrepreneurs are almost three times more likely to have their profits negatively impacted due to a lack of access to capital.
But Dellinger succeeded in spite of the challenges. The Curls brand can now be found on store shelves across the country, including Walmart, Target, CVS, and Kroger, as well as on Amazon, and although Dellinger wouldn’t disclose sales figures, she said Curls has seen growth every year.
“I found myself desperate to take back control,” says Dellinger. “Becoming an entrepreneur and owning my destiny was my opportunity to change that narrative.”
Self-funding success
Her success is matched by a growing peer network of black entrepreneurs in the beauty sector who are overcoming the financing challenges to reach a multi-billion-dollar black consumer market that historically has been underserved by retailers. African-Americans possess $1.2 trillion in spending power, according to Nielsen, and the black hair care industry alone generates billions in annual sales, according to Essence.
Personal funding is also how Melissa Butler, founder, and CEO of The Lip Bar, got her start in 2012. Like Dellinger, she started the cosmetics brand with around $30,000 of her personal savings, spurred by frustration with a beauty industry that centered on a singular archetype. For the first three years, Butler made every single product sold by hand.
“Every penny that we made, we reinvested into the business,” said Butler (Dellinger did the same). “For the first several years, I didn’t pay myself, my creative director, or my business partner,” Butler added.
A key moment for both beauty entrepreneurs was the deal with Target. Curls were able to expand to a wider customer base after signing a buyer with Target called Dellinger in 2009. The buyer was looking to revamp the store’s offerings after noticing chemical relaxers were no longer flying off the shelves as more women embraced the natural hair movement.
Curls, along with three other brands, was given a test in 105 Target stores to see how they would perform.
“That one shot actually gave us the chance to go to the other retailers,” Dellinger said. “That changed the entire path of the business.”
Butler said her confidence in seeking capital didn’t come until The Lip Bar expanded into Target in 2018. The brand started on Target.com before doing a 44-store test and then expanding into hundreds of stores. But despite being sold at one of the nation’s largest retailers and knowing her company was ready for growth capital, The Lip Bar still faced difficulty securing financing.
“Part of that is because the people that are writing those checks, especially at that time, were, again, white men at the helm who again weren’t the end users of the product,” Butler said. “They believed that the beauty industry was primarily owned by heritage brands such as L’Oréal and Maybelline.”
She was eventually able to raise money through the New Voices Fund, which was set up by Richelieu Dennis, the founder of Shea Moisture, to invest in women of color. In 2018, the fund gave her $2 million.
Even though former First Lady Michelle Obama made a lipstick with the company to encourage people to register to vote and current First Lady Dr. Jill Biden went to the company’s flagship store in Detroit last fall, Butler says a memory from Target is still the most important part of her path to success. “My niece at the time was in 5th grade, and she went into a Target store and she saw my face on our Target display,” Butler recalled. “So, she’s taking pictures with it, and for career day, they were all to dress up as someone, and she dressed up as me.”
Kim and Tim Lewis started CurlMix in 2015 as a DIY subscription box company that let people make their own hair products. At first, they used their own money to fund the business. However, they ended up pivoting to become a hair care line in 2018. That same year, they were able to get $25,000 in financing from Backstage Capital, a venture capital fund founded by Arlan Hamilton and focused on investing in women, people of color, and LGBT founders.
“For most people who are getting venture funding, $25,000 doesn’t feel like a lot to them,” said Kim Lewis. “But because I and Tim had made so many mistakes, we knew exactly how to spend it.” “That $25,000 was probably more like a $100,000 for us back then.”
After the funding, the company reached $1 million in revenue in 2018.
The growing success led to the CurlMix founders making it onto “Shark Tank” and ultimately declining a $400,000 offer from Robert Herjavec for 20% of the company, which turned out to be a wise decision.
“After we went on “Shark Tank,” I got a call from the CEO of LinkedIn and his partner, and they were like, “Can we invest a million dollars?” Lewis recalled the conversation with former LinkedIn CEO Jeff Weiner.
CurlMix ended up raising $1.2 million in a seed round—the start-up is currently valued at $12 million —and hihitting5.5 million in revenue in 2019, and $6 million in 2020. The founders said the pandemic caused them to pull back on advertising spend last year, but overall the business remained stable.
