Heyday, a New York-based skincare company offering customized facial treatments, raised $20 million in Series B funding to grow its brand nationally via a franchise system.
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“What we realized was skincare is one industry that hasn’t transformed or changed customer behavior,” Adam Ross, Heyday co-founder and CEO, told Crunchbase News. “Customers want to buy products, but have a lack of confidence in what to use. We saw what Warby was doing with glasses, and SoulCycle with cycling, and saw an opportunity to be a fantastic brand, staffed with estheticians that gives us unique attributes to become a trusted skincare platform.”
The company aims to democratize access to expert-led, personalized skin care services both at brick-and-mortar shops and online by leveraging data collected from servicing hundreds of thousands of facials, and pairing it with expert-led skincare routines to offer personalized experiences, co-founder and Chief Experience Officer Michael Pollak said in an interview.
Scaling the company
Level 5 Capital Partners led the round and was joined by existing investors Lerer Hippeau and Fifth Wall Ventures. The new round gives Heyday $33.2 million in total funding since being founded in 2015, according to Crunchbase data. This includes an $8 million Series A in 2018, led by Fifth Wall.
As part of the investment, Level 5 will become a Heyday anchor franchisee with a commitment to invest in 40 units over the next five years, and will work closely with Sean Bock, Heyday’s new chief development officer, who previously oversaw all franchise-led growth at Drybar.
Chris Kenny, managing partner at Level 5, said in an interview that his firm tends to be strategic when it comes to opening new locations. The company has been playing in the skincare space for a while, and has other investments around it, but was attracted to Heyday for its approach.
The pandemic forced a massive change of habit, and 2022 will be the year for habit reformation, he said.
“Its unit model resonated with frequency and volume, and the way it is delivered allows for a big change,” Kenny said. “Heyday showed it can do very well, so we will work on how to make sure to translate that experience nationally.”
The company also hired Maureen Sullivan as president to lead its expansion. Sullivan was previously president and COO at Rent the Runway. She brings an expertise and set of skills to the table to fill in where Ross said he and Pollack were lacking.
The skincare market continues to thrive: The global skincare market is projected to increase to more than $180 billion by 2024, according to market research firm Statista. Meanwhile, the U.S. market generated $17 billion in revenue in 2019.
Twenty-six global consumer goods companies describing themselves as offering skincare products raised $172.5 million in venture-backed funding since 2014, according to Crunchbase data. Among those in the dataset, San Francisco-based Curology, a cosmetic company that delivers customized prescription skincare, leads with $19.1 million in total funding.
Given the nature of facials, Heyday was affected by the global pandemic, Ross said. Prior to the lockdown, the company was running at $25 million in annual recurring revenue, and more than 70 percent of its revenue came from returning clients and word of mouth referrals.
The company has 10 locations across the U.S.: six in New York, one in Philadelphia and three in Los Angeles.
“This year is hard to forecast, especially with our Los Angeles locations still closed,” Ross added. “The esthetician industry was particularly impacted by COVID, so we are going to see a lot of closures and dislocation across the category. That will be a net positive for us to look at franchising with people who may have fatigue working with ‘the big guys.’ There is an incredible opportunity to play defense, put our heads down, and focus on the right journey.”
Meanwhile, the new funding will enable Heyday to further scale and expand through franchise of its brand and innovation in delivering personalized skincare, including digitizing experiences and services, Ross said. In addition, the company will tap into the more than 180,000 licensed estheticians across the country to bring on new talent and expertise.
By partnering with L5, Ross said he sees an opportunity to be a leader in skincare across the United States. This year will be one of investment with franchise sales occurring toward the end of the year.
“We are working to get through the current period,” Pollack said. “Everyone sees light at the end of the tunnel. This year will be a year of intense foundation building. Through the pain of the past year, there have been some silver linings, and we are planning what the next step looks like and coming out the other side.”
Feature photo courtesy of Heyday.
Blogroll illustration: Li-Anne Dias
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