Aether Beauty is raising a Crowd SAFE at a $6 million valuation with no discount. This price isn’t outrageous given Aether’s solid traction with units sold and positive reviews, plus the fact that the company owns the rights to the majority of its formulations. However, the revenue-to-valuation multiple based on $900,000 in 2020 revenues is a bit aggressive — particularly because those 2020 revenues were slightly less than those of 2019. Therefore, Aether’s price rating is above average but not stellar.

The global color cosmetics market was valued at $57.2 billion in 2018. The market is expected to grow steadily, though not explosively, in coming years. Rising investment in personal grooming, women’s increased participation in the workforce, and women’s increased purchasing power are cited as key growth drivers. Facial products (foundations, concealers, powders, bronzers, etc.) hold the largest segment of the color cosmetics market, around 25%, with eye and lip products also generating meaningful portions of revenue. More specifically, the clean beauty market is still small but growing rapidly. Clean beauty was valued as a roughly $5 billion market in 2020 with an expected CAGR of 12.07% over the next six years.  

Aether Beauty products have appeal for the average consumer, whether or not they care about clean beauty. However, the company’s most likely market is made up of consumers that are avid clean beauty enthusiasts with the discretionary income to spend on Aether’s relatively expensive products. Despite appreciable growth, this market is still quite niche. As a result, Aether’s market rating is middle of the road.

Aether Beauty was founded by Tiila Abbitt, a veteran of the beauty industry. Abbitt began her career as a fashion designer, spending three years designing knitwear at Margaret O’Leary. Soon after, she joined Sephora, where she would work for seven years in successive roles overseeing product development. In her last role in Sephora, as a senior director of product development, Abbitt focused specifically on sustainability. She led research and development on sustainable materials across Sephora’s entire product line and served as a leading member of the company’s Sustainability Leadership Council. Abbitt left Sephora to found Aether Beauty in 2018. 

Aether Beauty’s founder is undoubtedly deeply experienced in cosmetics product development and sustainable sourcing for ingredients and packaging. However, she does lack prior entrepreneurial experience and leadership experience at a small, rapidly-growing company. Thus, Aether Beauty’s team score is just slightly above average.

Aether Beauty’s core pitch is offering clean beauty products that appeal to Gen Z and millennial buyers concerned about the ethics and healthiness of their cosmetics. According to Aether, demand for clean beauty products is high, but product reviews are mixed because many clean formulations simply aren’t that effective. 

However, Aether Beauty’s products seem to be very similar to the large universe of other clean cosmetics brands. While Aether’s customer reviews are strong, any brand can promote select positive reviews that would look very similar to Aether’s. There doesn’t appear to be a strong reason why consumers would pick out Aether products in a lineup of other similar clean foundations and eyeshadows, at least not without doing deep research into their options. This lack of obvious distinction is why Aether’s differentiation rating is one of its lowest. 

Aether Beauty has posted solid, efficient growth since its founding in 2018. In its first year of operations, the company generated almost $180,000 in revenue and was narrowly profitable with a net income of $11,561. In 2019, the company boosted revenues by more than five times, generating $1,087,246 in revenue while still coming close to profitability with a negligible net loss of just $2,000. In addition, Aether’s direct-to-consumer (DTC) channel grew 168% in 2020, and the company enjoys a 34% repeat customer rate (much higher than average). 

However, investors should note a key caveat in evaluating the company’s performance. Numbers were strong in Aether’s fundraise materials through 2019, but 2020 was a slow year for the business. Though this is mentioned only in the discussion section of Aether’s raise, revenues dipped to roughly $900,000 last year as the company navigated distribution and manufacturing issues due to COVID-19. Aether says it has bounced back since, but investors should be aware that the company did not continue its strong growth last year. Additionally, this is Aether’s first pursuit of fundraising, so there is no past data on how the company will be able to execute on this capital influx. Balancing these uncertainties against Aether’s strong past traction, the company scores above average in the performance metric.

Aether Beauty is a strong brand with positive customer reviews and growing DTC distribution. However, the company does face significant competition from the countless other clean beauty brands entering the market. All of these brands tout their sustainability and ethics in some way or another, and casual consumers likely can’t differentiate between all of these options. Aether likely could win out for consumers who research their cosmetics very carefully, but that segment of highly-aware clean beauty consumers is quite niche and might not yield tremendous revenue for Aether. 

As Aether prepares to duke it out with a crowded landscape of clean beauty brands in coming years, it’s not clear yet that founder Tiila Abbitt has the entrepreneurial experience to guide the company through these high-stakes years. While Abbitt’s expertise in product development and sustainability is very strong, she could struggle in areas like manufacturing and hiring that are make-or-break operational objectives. It’s simply too soon to tell whether Aether Beauty has what it takes to outperform a legion of competitors. 

Aether Beauty has built a strong brand over the last two years. The company boasts almost 50,000 organic followers on Instagram, very positive customer reviews, booming DTC sales, and a strong return customer rate. While 2020 appears to have been a small setback for the company, the pandemic caused unexpected manufacturing and distribution difficulties for most businesses, and Aether seems to have bounced back ready to expand into more countries and sales channels this year. 

If past performance (particularly pre-2020, which was an unusual year) is any indication, Aether’s products are superior to competition, and the company’s loyal customer base will continue to evangelize the brand among clean beauty enthusiasts. With founder Tiila Abbitt’s strong connection to Sephora, Aether could be well-positioned to lead the clean beauty revolution and cement itself in the hall of fame of 21st century beauty brands like Glossier and Drunk Elephant.

Aether Beauty is a clean cosmetics brand selling non-toxic, vegan beauty products in sustainable packaging. Founder Tiila Abbitt was formerly a product development and sustainability specialist at Sephora, and she has created a makeup line that seems to have built a cult following among clean beauty enthusiasts. Strong growth between 2018 and 2019 is a signal that this bootstrapped company has all of the ingredients to become a leading brand. 

On the other hand, Aether Beauty suffered a small setback in 2020 with about $100,000 less in revenue than 2019. More importantly, the brand’s products aren’t clearly differentiated from the growing aisle of clean beauty foundations and eye shadows at beauty stores, so it might struggle to expand its customer base beyond its loyal niche of research-driven cosmetics aficionados. Therefore, Aether Beauty has been rated a Neutral Deal. 

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