Equity Fundraising for Beauty Brands: A Quick Guide
When raising equity funding for your beauty brand, there's more to it than just impressive sales growth. Here's what you need to prepare for:
Financial Performance:
- Early Stages: Demonstrate strong top-line growth and a clear path to profitability.
- Later Stages (Seeking Strategic Partnerships/Acquisition): Explosive top-line growth coupled with healthy EBITDA margins (20-30%).
- All Stages: Meticulous compliance, supply chain management, and inventory control. Investors are scrutinizing every aspect of your business, not just marketing and brand awareness.
Long-Term Vision: Investors are seeking brands with staying power. Can your brand stand the test of time and thrive even after acquisition? Build a brand, not just a product.
Tactical Preparation:
- Pitch Deck: A polished, investor-ready presentation.
- Data Room: Organized and easily accessible financial and inventory reports.
- Clear Vision: A compelling brand story and value proposition.
- Investor Communication: Know your audience and speak their language.
- Customer Insight: Understand your target market intimately.
- Ideal Investor Profile: Identify potential partners aligned with your vision.
TL;DR
It isn’t just about explosive top line growth. Brands need to have staying power and the business fundamentals must be there when looking for investors and strategics.
How to Actually Create a Good Investor Deck
I was working with a founder yesterday and they wanted to show me their pitch deck.
They opened Canva and can you believe that deck had 55 slides. 55 slides???
Some of those slides were just a brain dump. But you can imagine how SHOCKED I was to see 55 of anything!
I quickly went into the only necessary slides you need when you are trying to get a meeting with an investor.
Here’s my take on what an investor wants to see in a pitch deck.
First, Investors crave a compelling story, not a data graveyard. Sit down and actually write your company story and from there put the information into the following 12 slides:
1. Title & Contact Info: Make your brand shine and provide easy connection points.
2. Problem: Clearly define the pain point you solve. What unmet need are you addressing?
3. Solution: Showcase your product/service as the answer. How do you solve the problem?
4. Value Proposition: Why is your solution unique and valuable? What sets you apart?
5. Traction: Briefly highlight your progress (logos, key metrics). Show them you're gaining momentum.
6. Market Size: Briefly mention the opportunity (no deep dives). Paint a picture of the potential market.
7. Business Model: How will you generate revenue? Explain it simply.
8. Projections: Briefly mention growth potential (avoid complex models). Focus on the future potential.
9. Team: Introduce your powerhouse team. They're the ones making it happen!
10. The Ask: Clearly state your funding needs. What are you looking for from investors?
11. Closing: Summarize your vision and reiterate the call to action. Leave a lasting impression.
12. Contact Info: Make it easy for investors to connect.
Pro Tip: Leverage appendices! I learned this in investment banking.
For deep dives on market size, projections etc., create an appendix accessible after the meeting. Don't bog down your presentation.
Remember, you're the storyteller! Your passion and expertise will resonate more than overloaded slides. Let your deck be a springboard for a captivating presentation!
Tell the Story of your business through numbers
Revenue isn’t the only way to measure success as a business owner.
If you know my story then you know I started TBC because the founders I worked with didn’t know how to tell the story of their business in numbers.
They could back into product development, marketing, and hiring but they could not back into how to quantify their business in any way. From budgeting, to KPIs, they had no idea how to measure their business and it’s success in numbers.
Today, I'm sharing my top tips on how to go beyond revenue and use data and numbers to tell a compelling story about your business.
1. Focus on impact, not just income:
- Sure, your $X million in revenue is impressive. But what did you achieve with that?
- Did you increase market share? Expand into new locations? Launch innovative products?
- Show investors how your revenue translates into real-world impact.
2. Choose metrics that matter:
- Don't just throw random numbers at people. Pick the ones that truly showcase your growth and potential.
- Customer acquisition cost, lifetime value, churn rate – these are just a few examples.
- Tailor your metrics to your specific industry and business model.
3. Tell a story with your data:
- Numbers alone can be boring. I say this all the time. Numbers tell a story. Weave them into a narrative that highlights your journey, challenges, and triumphs.
- Explain the "why" behind the numbers – what decisions led to these results?
4. Be transparent and authentic:
- If you’re speaking to investors, understand that they appreciate honesty. Don't be afraid to share your setbacks and learnings.
- Authenticity builds trust, and trust is crucial for securing investment.
Remember, numbers are powerful tools for storytelling. By using them strategically, you can paint a vivid picture of your business's past, present, and future.
Harnessing the Potential of Micro Cash Flow Management
How we helped a client go from bleeding $1M in cash every month to profitable in 3 months using micro-cash flow management.
Micro cash-flow management is a term we coined at my fractional CFO and accounting firm. It's a practice of hyper-focusing on cash flow in your business.
Think weekly, even daily tracking, proactive payment prioritization, and ruthless expense scrutinizing – all geared toward maximizing every dollar.
Micro-cash flow management in action:
Weekly Cash Flow Tracking: Instead of the typical monthly monitoring, we implemented weekly cash flow tracking for agile cash control.
This granular insight, exceeding the standard annual expense review, allowed us to:
Pinpoint exact payment due dates: We knew precisely "what needed to be paid and when," enabling strategic prioritization and potential payment negotiation.
Leverage payment flexibility: By identifying immediate cash needs, we could negotiate payment extensions for certain vendors or partially fulfill invoices until client receivables arrived.
Expense Categorization: Emphasis on differentiating revenue-linked and operational expenses, we categorized monthly expenses as either:
Directly revenue-generating: These expenses, crucial for client projects, received prioritized payment during cash dips.
Essential for core operations: Non-revenue-generating but necessary expenses were scrutinized for potential temporary reductions or cost-saving alternatives.
By applying micro-cash management principles, we:
- Maintained client project delivery: Despite revenue fluctuations, we ensured on-time event production by prioritizing revenue-generating expenses and creatively managing cash flow.
- Preserved operational stability: While optimizing costs, we protected essential operational expenses, preventing disruptions and safeguarding long-term business viability.
What other ways have helped you manage your cash in crisis?
Your Destiny Cannot Be Stopped
Every week I sit and think about all the things I learned in business and in life the week prior here’s what I what I learned recently.
I learned in business and in life, your destiny cannot be stopped. There will be times where you will not be prepared. There will be times where you won’t be confident. There will be times where you have no idea what you’re doing, but if it’s your destiny, and your experience and all the work that you’ve done prior to this moment has prepared you, whether you feel unprepared or not is irrelevant. If it’s destiny, it will be yours.
I also (re)learned that focusing on your customer is one of the ways to get to profitability faster. I recently did a talk in South Carolina, where I talked about how businesses can get to profitability. In that research, as I prepared my presentation, I was reacclimated to all the ways that centering, your customer can lead to profitability. Whether that is, reducing customer acquisition cost, whether that is creating longer term customers, whether that is having customers spend more with you - making sure that you were centering the right customers is always a path to profitability.
This week I learned that emotions are not facts. I also learned that there is a difference between feelings and thoughts. I know that may seem incredibly basic and foundational, but in my dealings with clients, friends and romantic partners, I can tell you now that the idea that there is a difference between feelings and thoughts is something that not a lot of people know.
I also learned this week that more people self-sabotage then they realize, including myself.
In addition to that, we all need to be just a little bit more audacious. A little louder. A little more vocal about the things that we do and what we’re good at.
This week, I was also reminded of the concept of weak ties where your network may not be able to provide you what you need but there is someone that they know that definitely wants your service or whatever it is that you're selling. Again, to my last point, BE VOCAL about what you’re looking for. Period.
And lastly, I did a quick dive into aggregation theory. This is something that I studied for quite a bit of time and I want to use the idea of aggregation theory or at least the consequences of aggregation theory as a customer acquisition strategy for businesses, especially service-based businesses. More on that in the coming weeks.
What did you learn last week?
The Power of Outsourced Finance Leadership
Someone said I was a great operator the other day.
After almost 5 years of running TBC I still am so shocked to hear that.
I’m a fractional CFO and have a team of accountants to offer what I like to call an outsourced finance department.
I’m not talking bookkeeping. I’m talking all the things your corporate job finance department used to do but for a fraction of the cost of hiring an entire finance staff in-house.
People often ask me why not just go standard bookkeeping and I tell them because my clients need me! Founders need help. Especially as your business grows from $1M in revenue to $5M to $20M to $100M which is literally the trajectory some of our clients are on.
Here’s a few things we offer:
- Accounting/bookkeeping
- AP/AR
- Sales Tax Management
- Cash Flow Management
- Treasury Management
- Reporting
- Full staff
Imagine your bank collapsing and you needing to figure out how to send payroll, while trying to fundraise and keep investors happy, while your funds are frozen in the middle of one of the biggest tech conferences/gatherings of the year.
If my founders had to do that they’d give up. They’re companies are too big and growing too fast to know what to do when finance crisis arise. And trust me THEY DO ARISE!
My team and I stand in the gap for you so you can do what you do best.
We’re making calls, we’re talking to investors, we’re building the models and making sure you’re on target And your team isn’t spending too much money.
Not many firms can say they do that. And in one team??? Nah you can’t find that.
So yes, I am a good operator. Yes, I am proud of what I built and if you are a business owner who wants to grow to $100M in revenue and need a finance team that can scale with you please give me a call.