ipsy, an online makeup subscription delivery service, said today that it had raised $100 million.
Users subscribe to ipsy, paying the company $10 per month, which then sends them a monthly package of makeup called a Glam Bag filled with various samples of products. It isn’t the only subscription service that targets the beauty industry, but it appears to at least have struck a chord and built a large user base of 1.5 million subscribers, giving the company an annual revenue of more than $150 million. ipsy says it has been profitable for more than three years.
The round was led by TPG Growth and Sherpa Capital. A round this large after taking very little or no venture financing isn’t entirely unheard of. GoFundMe, for example, was a previously bootstrapped startup that earlier this year raised a venture financing round that valued the company at $600 million. Basically, it’s an attractive business that’s taken little to no outside capital that’s making money — something that is going to very quickly attract the attention of investors.
ipsy isn’t alone in this space, with other companies like Birchbox also delivering makeup samples for $10 per month. But at the very least the presence of multiple companies that have raised large financing rounds — Birchbox raised $60 million in April last year — speaks to the potential market for those startups.
Perhaps part of the company’s large presence can be traced to its popularity on YouTube and other social channels — where the company is very active. It posts its makeup tutorial videos on YouTube, for example. And as is the case with many startups, having that focus baked into the company’s DNA is important to driving success. In this case at least, Founder Michelle Phan has seen a lot of success on YouTube — her videos have been viewed more than 1 billion times, and she also a 2015 People’s Choice Webby Award for the best how-to DIY channel.
To be sure, Birchbox also has a large social following like ipsy does (though in a Facebook shootout, ipsy has a million more likes than Birchbox does). And all this doesn’t necessarily mean ipsy — or Birchbox or any others — has cracked some kind of a code on social channels, but at the very least it suggests there’s something there. Brands also like working with companies like these in order to drive additional exposure for their products.
Given the company’s revenue, the involvement of a firm like TPG, which invested in Uber for example, and other big rounds that have happened like GoFundMe’s for startups with little financing, we think it’s safe to assume the valuation for the company is north of $500 million — and our sources say that’s in the right ballpark.
“TPG and Sherpa Capital have a proven track record of helping build innovative consumer brands that are disrupting large, traditional industries,” ipsy CEO Marcelo Camberos said in a statement. “With their extensive relationships in the media world, and deep understanding of how technology is driving new business models, these partners will be invaluable to us as we continue to scale and innovate to delight our community.”
ipsy is just under four years old and prior to this venture financing round, it had raised less than $3 million. It currently has 10,000 content creators as part of its ipsy Open Studios platform.