Dive Brief:
- Ipsy, a makeup subscription delivery service similar to Birchbox, announced it has raised $100 million in a venture capital funding round led by TPG and Sherpa Capital.
- The company sends subscribers “Glam Bag” packages of sample-sized beauty products to subscribers every month for a $10 fee.
- Ipsy has a subscriber base of 1.5 million, and says it has been operating profitably for three years.
Dive Insight:
Ipsy—a profitable $150 million business already—has raised $100 million in venture capital, making it likely that the makeup sample subscription service will scale up rapidly. While its $10 Glam Bags aren’t the only samplers in the beauty segment, the company has user base of 1.5 million subscribers.
The leaders of the funding round, TPG and Sherpa Capital, have a track record of funding industry-disrupting start-ups such as Uber and GoFundMe. The round places Ipsy’s valuation at about $500 million, neck-and-neck with where primary competitor Birchbox’ valuation landed after a $60 million funding round last April.
Ipsy is adept at leveraging social media such as YouTube, where founder Michelle Phan recently won a 2015 People’s Choice Webby Award for the best how-to DIY channel with more than 1 billion views. The company also has some 10,000 users who contribute content to its channels, and has more Facebook likes than Birchbox.
Birchbox used its capital infusion to push into physical locations, with a flagship lab store in New York City’s Soho and two more promised next year at locations to be announced. With cash on hand, Ipsy may soon look to brick-and-mortar, too.
