Youthforia – Sustainable Makeup
DEAL
EPISODE SUMMARY
🕓 Air Date: March 3, 2023
Asking For:
$400,000 for 5%
Investor:
Mark Cuban
Deal:
$400,000 for 8%
PRODUCT SUMMARY
Youthforia offers bio-based makeup products, including the innovative BYO Blush that reacts to the skin’s pH, providing a perfect, personalized shade and is designed to be worn while you sleep.
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Background Story
Youthforia is a makeup brand founded by Fiona Co Chan in San Francisco, California. Fiona, originally from a family of refugees, had a background in the tech industry and a passion for creating makeup products that are both safe for the skin and the environment. Her inspiration came from her personal experiences, traveling to some of the world’s most polluted cities in Asia for her tech job. Constantly wearing makeup in such environments, Fiona’s skin was adversely affected, leading her to search for makeup that wouldn’t harm her skin but would also act as skincare.
Her journey led her to the concept of “makeup you can sleep in,” and she set out to create makeup that not only wouldn’t ruin her skin if she slept in it but also had a positive impact on the skin. She decided to develop a universally flattering blush that adjusts to individual skin tones. To achieve this, Fiona traveled to Korea to meet with manufacturers and tested numerous samples before creating the innovative product she presented on Shark Tank.
The Product
Youthforia’s flagship product is the BYO Blush, a color-changing blush oil that reacts to the user’s skin’s pH to provide the perfect shade. The user simply applies it to their cheeks, and the blush adjusts to match their skin tone, creating a natural flush.
In addition to the BYO Blush, Youthforia offers the Pregame Primer and Dewy Hydrating Lip Glosses. The primer helps prepare the skin for makeup application, while the lip glosses provide a hydrating and dewy finish to the lips.
This innovative product eliminates the need to find the right shade for your skin tone and undertones, making it universally flattering. The products are made from bio-based, plant-based renewable ingredients, making them suitable for the skin and environmentally friendly.
Customers can purchase Youthforia products through the company’s website as well as on Amazon. They are set to launch in Ulta with 309 doors and Thirteen Lune at JCPenney with an additional 300 doors, expanding their retail presence.
How It Went
The company’s position before Shark Tank
Youthforia has achieved impressive success in a relatively short time. They had lifetime sales of $2 million within approximately 16 months of launching the business. Currently, 50% of their sales come from direct-to-consumer channels, 15% from Amazon, and 35% from wholesale. They are set to expand their retail presence in stores like Ulta and JCPenney.
The company’s financial performance and rapid growth attracted the attention of the Sharks. Fiona’s pitch highlighted their strong organic growth, with 84% of revenues coming from organic channels. Their cost of goods sold (COGS) for the products ranges between $4 to $6 landed, demonstrating favorable margins.
The Negotiations:
The negotiations in the Shark Tank for Youthforia were lively, with multiple offers and counteroffers. However, Barbara Corcoran and Lori Greiner both expressed concerns and decided to bow out. Mark Cuban was the first to make an offer, offering $400,000 for 20% equity, along with a loan of $300,000 against purchase orders at market rates.
Kevin O’Leary made a unique offer, proposing a $400,000 investment with $100,000 for 20% equity and a royalty structure, where he would receive 20 cents for every unit sold until the $500,000 investment was paid back. Cuban and O’Leary then engaged in a negotiation war, with Cuban eventually offering $400,000 for 8% equity with no royalty.
This offer was accepted by Fiona, and the deal was sealed, marking a unique moment as Mark Cuban invested in a makeup company for the first time in Shark Tank history. The negotiation showcased Fiona’s strong negotiating skills, as she successfully navigated the offers to secure a deal that suited her company’s needs.
