Deal to Watch: Hair Styling On the Go

Key Stats:

Summary

The Slash Haircare team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

Problem

While countless industries have been transformed by technology in the last 30 years, few industries have witnessed an explosion of innovation as much as the beauty and cosmetics industry. The $532 billion beauty industry is expanding at a 6.9% CAGR, with hundreds of new brands launching each year across skincare, cosmetics, and haircare. 

Within the haircare segment, entirely new product categories have been created in the last 10 years. Take dry shampoo, for example: 2000s women thought that the only way to remedy greasy hair was to take a shower, but today’s women swear by the convenience of a spray-in hair cleaner (as evidenced by a $1.48 billion market with 9% CAGR). 

Millennials are Instagram-obsessed, and 60% of users leverage Instagram for product discovery. That eager audience creates a significant opportunity for well-conceived new haircare products to enter the market and win customers.

Solution

Slash Haircare is a direct-to-consumer (DTC) hair products company selling hairsprays, leave-in conditioners, and shampoos to digitally-native women. Slash’s brand is targeted toward active, busy women who don’t want to spend large amounts of time styling their hair each day, and prefer simple, on-the-go products to refresh their style from gym to work to date night. 

Slash Haircare currently offers five SKUs: ACTIVE DETOX Shampoo, a quick-foaming shampoo for the shower; WATERLESS Shampoo Mousse, a dry shampoo free of white powdery residue; TONIC MIST Detangle/Style Spray, a leave-in conditioner with heat protection; BODY & TEXTURE Hairspray for hold with textured hair; and SHINE & GLAM hairspray for hold plus shine. All of Slash’s products are vegan, not tested on animals, and sulfate- and paraben-free. 

Slash’s products are sized at under three ounces to fit in purses or workout bags and are TSA-friendly. Each item retails for $18-$22, with three-product bundles available for $57-$60. The company reports a 3.5% DTC conversion rate, with 15% of customers returning to purchase more products and less than 1% returning their purchase. Slash recently listed on Amazon to generate additional sales, but the company did not report on Amazon performance in their raise materials.

Slash launched with online sales through its website (slashhair.com) in September 2019 and generated just over $8,000 in gross revenue through the end of that calendar year. However, the company incurred over $100,000 in expenses in 2019 (more than 80% directed toward marketing and advertising), for a net loss of $101,000. Financial performance during the first quarter of 2020 was not reported.

The Team

Slash Haircare’s CEO is Francois Viargues, who began his career as a Senior Auditor for Ernst & Young France before entering the beauty and haircare industry. Viargues worked at Pierre Fabre, a pharmaceuticals and cosmetics company, for 15 years, ultimately ascending to CFO of the company and later the Vice President of the Rene Furterer premium hair care division. Therefore, Viargues has significant experience overseeing financial performance and operations for haircare businesses. 

Adrien Flammier serves as Slash Haircare’s Creative & Artistic Director, leveraging his experience as a Master Hairstylist and Lead Stylist for NY and Miami Fashion Weeks to produce high-quality haircare products and style Slash’s promotional assets. Slash’s third employee is Kerry Dacas Johnson, who gained experience at Tarte Cosmetics, Bumble and bumble, and Pierre Fabre before becoming an independent marketing consultant and ultimately joining the Slash team as Marketing & Digital Director.

Growth Plan

Slash Haircare does not provide specific growth plans, but SEC filings reveal that the company intends to spend the bulk of raised capital on Facebook/Instagram and Google Ads to drive customer acquisition. Beyond the near-term, Slash is developing two additional products for launch in mid- to late-2020 and is exploring retail partnerships to offer products in-store by the end of this year.

Why We Like it

• Well-rounded team: Slash Haircare’s three employees each contribute vital perspective toward the launch and growth of a successful DTC haircare company. CEO Francois Viargues has corporate financial experience often missing among founders of startups, and even better, that experience comes from a cosmetics and haircare conglomerate. Creative Director Adrien Flammier offers impressive hairdressing experience toward superior product development and creative marketing. Digital Director Kerry Dacas Johnson has experience at two leading millennial-focused cosmetics and haircare brands and spent time as an independent marketing consultant. This blend of business savvy, creative direction, and marketing tactics are the key ingredients of a promising DTC concept.

• Well-designed DTC brand: The Slash team has clearly formulated their product packaging and branding to cater to the digitally-native millennial or Gen Zer. With bright colors, bold fonts, and an emphasis on modern women’s busy lifestyles, Slash is well-positioned to launch paid advertising campaigns that will acquire new eyes. If they are able to sustain a strong conversion rate and low return rate, drawing in customers via ads could be the strong foundation to grow a multi-channel brand.

• Upcoming retail launch: While the previous point indicates that Slash has the potential to succeed through paid digital advertising, the Facebook/Instagram and Google ads rat races are often unkind to DTC brands. Ads on Facebook continue to grow in cost, and investors wary of disappointing DTC stories like that of Outdoor Voices are cautioning their founders to spend less on digital ads. It’s therefore prudent for Slash to prep for an in-store retail launch in late 2020. Winning a spot on the shelves of Sephora or a similar market leader can provide steadier revenue uncorrelated with the cost of digital ads.

Rating

Slash Haircare has launched a well-branded line of hair products formulated by a leading hairstylist and filling a specific niche in the haircare market: handy-sized products ideal for quick styling on the go. While the company has less than a year of sales under its belt, the founding team’s combined experience is a strong indicator for future success. 

Moreover, start-up beauty brands have been a hot space for acquisitions and monster growth in recent years. Henkel, a German consumer goods conglomerate, acquired premium curly hair care company DevaCurl in late 2019, at which time Henkel’s CEO indicated that hair care is a category of interest as the company considers new acquisition prospects. Of course, the success of DTC cosmetics giant Glossier is the dream of every founder. Glossier achieved a “unicorn” valuation of $1.2 billion and has indicated that it may pursue an IPO in coming years. The broad beauty space, including hair care, has plenty of room for new brands to grow and catch the eye of venture capitalists and/or strategic acquirers. 

While Slash Haircare only launched in late 2019 and has limited financial performance to project from, the company demonstrates several key signals of future success: an experienced, diversified team, DTC branding and products that feel natural for 2020, and the potential of an even more valuable in-store retail launch. The sustained growth of the beauty space combined with these assets make Slash Haircare a Deal to Watch.