Luna Magic Makeup
DEAL
EPISODE SUMMARY
🕓 Air Date: January 15, 2021
Asking For:
$200,000 for 10%
Investor:
Barbara Corcoran
Deal:
$250,000 for 30%
PRODUCT SUMMARY
Luna Magic is a beauty brand with a Latina vibe, offering high-quality cosmetics with vibrant colors and packaging that celebrates Latina culture.
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Background Story
Mabel and Shaira Frias, the founders of Luna Magic, are two Dominican-American sisters from Washington Heights, New York City. They were the first women in their family to attend college, with Mabel earning a master’s degree in design from Parsons Design School and Shaira pursuing journalism and makeup school.
Frustrated by the lack of beauty brands that resonated with their Latina culture and skin tones, they founded Luna Magic to provide quality cosmetics that celebrated their heritage. They aimed to offer products that were “bueno, bonito, y barato,” representing great quality, beautiful packaging, and affordable prices. Their brand’s creative color names, such as salud, dinero, y amor, reflect their commitment to celebrating their culture every day.
The Product
Luna Magic offers a range of cosmetics, including eye shadow palettes like the Uno palette, designed by one of the founders. Their cosmetics are known for their vibrant colors and long-lasting formulas with minimal product fallout.
One of their top-selling products is the $26 Uno eye shadow palette, available in various shades, including dinero (a vibrant green). Luna Magic’s products are competitively priced, with a $3.40 landed cost, allowing for healthy profit margins.
Customers can purchase Luna Magic products directly from their website and, soon, in Walmart stores. They also engaged in marketing partnerships, such as supplying brushes to subscription box companies, to increase brand visibility and generate income.
How It Went
The company’s position before Shark Tank
Luna Magic has generated $103,000 in income through various sources, including $16,000 in product sales, a $30,000 grant, and $57,000 through marketing partnerships. They secured a significant order from Walmart, with a purchase order value of $400,000 for 1,538 stores in their initial rollout and additional testing for end cap displays. The founders have invested $250,000 of their own savings into the company and currently have $157,000 in the bank.
The company’s expansion into Walmart presents a substantial opportunity for growth but also poses logistical challenges. They are seeking a logistics partner to help manage their supply chain effectively. With projected sales of $1.1 million in the coming year due to their Walmart partnership, Luna Magic aims to establish a strong presence in the beauty market while celebrating Latina culture.
The Negotiations:
During the pitch, the Frias sisters requested $200,000 for a 10% equity stake in Luna Magic. Barbara Corcoran expressed interest but was concerned about the financial complexity of the business. She offered $250,000 in the form of a credit line for a 30% equity stake, emphasizing the need for funding to meet the demands of their Walmart order.
The sisters considered the offer but expressed interest in discussing other options. Barbara inquired about potential future purchase order financing, to which Corcoran agreed as long as the orders were in place. Despite some hesitation, the Frias sisters ultimately accepted Barbara Corcoran’s offer, impressed by her experience and understanding of the challenges they would face in dealing with Walmart.
The negotiation highlighted the immense opportunity Luna Magic had secured with Walmart but also the need for strong financial backing and organizational support to navigate the challenges of supplying such a large retailer. Barbara Corcoran’s offer provided the necessary funding and guidance to help the company succeed in this new venture.
