Stryx Cosmetics & Skicare For Men
DEAL
EPISODE SUMMARY
🕓 Air Date: May 13, 2022
Asking For:
$600,000 for 5%
Investor:
Robert Herjavec
Deal:
$600,000 for 10%
PRODUCT SUMMARY
Stryx offers cosmetic and skincare products specifically designed for men, including concealer, tinted moisturizer, energizing eye tool, and beard and brow gel comb.
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Background Story
Stryx, a cosmetic company based in New York, was founded by Jon and Devir, two individuals who identified a significant gap in the market for cosmetics tailored to men. Jon’s personal experience during his wedding day, where he encountered an embarrassing blemish, became the catalyst for the company’s inception. This incident led him to recognize the lack of easily accessible and discreet cosmetic solutions for men, ultimately inspiring the idea behind Stryx.
Despite lacking prior experience in the cosmetics industry, the founders were determined to address this need. To ensure the development of high-quality products, they collaborated closely with professional makeup artists, leveraging their expertise in formulating cosmetic products specifically for men’s skin. This partnership enabled them to create a line of products that included a sleek concealer tool, a tinted moisturizer, an energizing eye tool, and a beard and brow gel comb, each tailored to address common grooming concerns for men.
Despite the initial challenges of breaking into a market traditionally dominated by products aimed at women, Jon and Devir were able to secure significant funding of $500,000 through a combination of support from friends, family, and industry connections. Their determination to challenge social norms and offer men discreet, effective cosmetic solutions reflects their vision to redefine traditional grooming practices and promote self-confidence among male consumers.
The Product
Stryx offers a range of carefully crafted cosmetic and skincare products specifically designed for men, catering to various grooming needs and concerns. Their flagship products include a discreet concealer tool, a tinted moisturizer, an energizing eye tool, and a beard and brow gel comb, each with unique features and benefits.
The concealer tool is engineered for easy application, effectively covering blemishes, dark under-eye circles, and other imperfections without the need for additional primers or tools. It provides a seamless and natural look, enhancing the appearance without appearing conspicuous. The tinted moisturizer offers hydration and light coverage, providing a natural and even skin tone for a refreshed look.
The energizing eye tool is designed to target signs of aging, reducing the appearance of fine lines and wrinkles around the eyes, providing a rejuvenated and youthful look. The beard and brow gel comb is tailored to groom and shape facial hair, ensuring a polished and well-maintained appearance.
Stryx products are primarily available for purchase through their direct-to-consumer (D2C) platform, as well as through retail partners like CVS. With a price point of approximately $30 per product and an 85% gross margin, Stryx products aim to offer men accessible and effective grooming solutions without the complexities often associated with traditional makeup.
How It Went
The company’s position before Shark Tank
Stryx has demonstrated promising performance, particularly through its strong direct-to-consumer (D2C) sales channel, generating approximately $130,000 in monthly sales. The company has also achieved a significant milestone by securing a partnership with the renowned nationwide retailer CVS, a testament to the brand’s growing market recognition and acceptance. Positioning their products strategically in the shaving aisle of CVS stores has not only increased their visibility but also helped normalize the concept of men’s cosmetics.
While the company has managed to raise approximately $1.5 million in total funding, primarily from friends, family, and industry connections, its current financial health is a cause for concern. Stryx operates at a net loss, with monthly expenses ranging from $40,000 to $50,000. These losses stem primarily from substantial investments in marketing and growth initiatives aimed at expanding their market presence and customer base. Although the company has reported significant sales figures, the ongoing losses suggest the need for improved cost management and sustainable revenue generation strategies.
The company’s strong emphasis on marketing underscores its commitment to building brand awareness and driving product demand. However, this has also led to a critical dependency on continuous capital injections to sustain its growth trajectory. Stryx’s structure is primarily focused on product development, marketing, and sales, with a strong emphasis on direct-to-consumer distribution. While the company has successfully secured retail partnerships with CVS, its reliance on this channel raises concerns about the potential financial strain associated with the capital-intensive nature of retail operations. The company’s key focus at this stage revolves around optimizing its operational efficiency, achieving profitability, and securing additional funding to support its ambitious growth plans.
The Negotiations:
During the negotiations, the Sharks expressed various concerns about Stryx’s high valuation and its financial health, prompting a thorough discussion about the company’s current position and future prospects. While some Sharks raised doubts about the branding strategy and the need for clearer messaging on the product packaging, others acknowledged the brand’s potential in a previously untapped market segment.
Kevin proposed a structured deal involving both a factoring loan and equity, aiming to secure a significant return on his investment through a combination of interest and royalty payments. Robert, on the other hand, demonstrated a deep understanding of the company’s capital needs and proposed a $600,000 investment for a 10% equity stake without any royalty obligations, highlighting his long-term commitment to the company’s success.
Amidst concerns about the perpetual nature of royalty payments, Robert’s offer emerged as a more favorable option for the founders, considering his genuine interest in supporting the company’s growth trajectory. Although negotiations initially revolved around the equity percentage, Jon and Devir ultimately agreed to Robert’s terms, recognizing the value of his expertise and long-term partnership in scaling Stryx’s operations and market presence. The negotiation process shed light on the importance of aligning with an investor who not only offers financial support but also shares the founders’ vision for the brand’s future.
