Beauty’s newest backers? Celebrities

This article is part of our Vogue Business membership package. To enjoy unlimited access to our weekly Beauty Edit newsletter, which contains Member-only reporting and analysis, the Beauty Trend Tracker and Leadership Advice, sign up for Vogue Business membership here. Kate Hudson is not only an actor and entrepreneur; she’s now adding beauty investor and creative advisor to her repertoire. This week, Hudson became just that for Symbiome, a San Francisco-based microbiome-focused skincare brand that she has been using for years in a non-sponsored capacity. “Almost immediately after I started using Symbiome, I could see and feel the difference,” Hudson said in a statement. She added that she felt aligned with Symbiome’s “mission to improve health from the outside in”. Hudson is no stranger to beauty, having collaborated with wellness brand Juice Beauty, launched her own nutrition company Inbloom, and taken on the role of global ambassador for medical aesthetics firm Alma Lasers. However, her role as an investor and advisor marks a shift in the industry as a growing number of celebrities invest in beauty brands after many years of taking on ambassadorship roles and acting as spokespeople. Last September, pop star Dua Lipa became an investor in Dizziak, a cult London-based hair and body care brand. Singer-songwriter Miley Cyrus invested an undisclosed sum in Dolce Glow this February, following years of receiving custom spray tans from the Los Angeles-based self-tanning brand’s founder Isabel Vita. US media personality Oprah Winfrey invested an undisclosed amount in Dr Barbara Sturm’s namesake science-backed skincare brand in April. Model Karlie Kloss is among the stars that have teamed up with private equity firm L Catterton to invest in coconut oil brand Kopari. Influencers are also becoming sources of funding: Leandra Medine Cohen, of Man Repeller fame, has invested in skincare brand Drunk Elephant and makeup label Kosas. Celebrities who invest in brands typically get an equity stake in return (that amount varies depending on the company’s valuation and what the talent is able and willing to bring to the business). The two most common deal structures are where celebrities invest their own money (usually between $100,000 and $1 million), or where stars invest their time through sampling, feedback and/or by offering creative input or advisory services. Unlike ambassadorships, these roles tend to be behind-the-scenes. There is a reluctance among some talent agents to invest time and resources in a long-term investment play with no guarantees, says Vickie Segar, founder of WPP-owned agency Village Marketing. “It could be a hit or miss, so you’d have to be willing to work for years with the potential to make money — but no [traditional talent agency] is set up that way because you have to pay people for their time.” Cash-heavy sponsorship deals are popular because they’re a safe bet, but it’s a shortsighted move, she believes. “We’ve seen celebrities being pushed towards TV commercials and multi-million-dollar deals when, actually, there are so many other deal structures that they should be entertaining that could make them real money over time.” More complex deals are expected to emerge as celebrities “understand that they have value beyond just their likeness”, predicts Segar. As consumers develop a more critical view of influencers, reflected in social trends including ‘de-influencing’ and ‘corecore’, having real skin in the game could lead celebrities to post in a more dedicated and authentic way — for example, by endorsing niche or cult labels even though they don’t have the big budgets to match the megabrands. The challenge will be getting ahead of the curve, as traditional agencies may lack the know-how to support these new kinds of deals. It’s a glaring white space as the talent business heats up, experts warn. The advantage over launching a new brand In recent years, stars including musicians Pharrell, Harry Styles and Ciara have introduced their own makeup and skincare lines. However, celebrity brands face growing industry scepticism around their authenticity and credibility, and some are starting to struggle. Jared Leto’s skincare brand Twentynine Palms ceased operations in September, after Leto terminated his relationship with parent company Maapilim due to an alleged breach of contract and mismanagement. Leto and Maapilim did not respond to requests for comment. Amyris — which manufactures and sells celebrity brands including model Rosie Huntington-Whiteley’s makeup label Rose Inc, TV personality Jonathan Van Ness’s haircare line JVN and actor Naomi Watts’s menopausal beauty brand Stripes — filed for Chapter 11 bankruptcy in August. Parent company Cronos Group recently shut down actor Kristen Bell’s CBD skincare brand Happy Dance after only two years in business, while Purely Byron, the skincare brand founded by model Elsa Pataky and backed by her husband actor Chris Hemsworth, collapsed less than a year after launch. Ensuring a smooth running of day-to-day operations is not easy, and recent examples where celebrity brands have failed highlight the often-overlooked realities of running a business, says Susan Anderson, managing director of financial services firm Canaccord Genuity. As consumers become savvier about misinformation and sponcon tactics, many are also asking more questions about product ingredients and efficacy. “Consumers want to make sure they’re buying something that really works,” she says. “It’s easier [for celebrities] to back a brand that has already been developed and tested, rather than trying to create an expertise-driven brand from scratch.” “It’s much more appealing to come into a business that has an operational model, the product works, and everything is set up for success,” agrees Village Marketing’s Segar. Financially, it can be very rewarding, she adds. “When you do a TV spot, you might make $2 million or $3 million. A brand could be flipped for $1.2 billion. The M&A part of a business is where you make real money.” The importance of shared values Alignment of values is important for celebrities whose strategy is to expand their media influence. Dua Lipa said she was drawn to Dizziak founder Loretta De Feo’s “ethos of making healthy haircare products accessible to people of all hair types”. While Lipa made her name as a singer and performer, the 28-year-old has become much more than that. In 2021, she founded Service95, an online platform that includes a weekly newsletter, website and podcast, where Lipa interviews creative artists ranging from Blackpink’s Jennie to Billie Eilish. She also recently turned fashion designer and co-created Versace’s summer collection, shown in Cannes. “Celebrities are no longer private people who don’t show up anywhere,” explains Village Marketing’s Segar. “They’ve realised that there’s value in expanding their media [influence] and they’re creating a new model that can be very profitable.” Dolce Glow is the first consumer brand that Cyrus has invested in. The star was a regular Dolce Glow customer for years, says founder Vita. Cyrus eventually contributed to its first family-and-friends funding round in return for an undisclosed amount of equity in the brand. Cyrus does not often sign beauty sponsorship deals (Gucci Beauty is her only brand partner currently), making her investment more impactful than a typical celebrity endorsement, says Vita. “Miley is known for her [music and acting] talents. She has never been an influencer. You don’t see her posting PR packages or doing her makeup in the car and sharing what products she likes best, and likely never will.” Yet, her influence remains. “Miley is a global icon and her reach puts a smaller brand like ours in front of key people, whether it’s potential distribution partners or other investors for future rounds.” Having a celebrity investor can make brands more attractive as they prime for an exit, says Village Marketing’s Segar. “Every business is looking to exit or IPO, especially if they’re not privately run from the beginning, because venture capital and private equity firms don’t care to hold onto businesses, so, you either have to sell or go public.” Investment from a celebrity investor could mark a “tipping point” that “shifts a business into a more high growth exit strategy”, she observes. A celebrity founder could take five to 10 years to get their own brand to a similar stage of growth; putting their weight behind an existing brand could result in an exit of hundreds of millions of dollars within two to five years, Segar predicts. Winfrey was first introduced to Dr Barbara Sturm products by Stella McCartney. She is a fan of the brand’s skincare range for darker and melanin-rich skin tones, as well as the V collection for intimate body care and the signature $150 glow drops. “I loved it so much that I called up Dr Barbara Sturm and said, ‘I want to invest in your company’”, Winfrey recounted during a session of O Daily talks in New York City. “I have never done that before. Ever. So, that’s how good the products are.” Asked whether Winfrey’s investment had anything to do with reports that Sturm is mulling a sale of the business, Sturm responds: “I viewed it as a strategic investment, not a celebrity investment. Oprah is a world-class, self-made businesswoman and tastemaker. It can only be good for the brand to have her investment and involvement in it.” Dolce Glow’s Vita says that she isn’t planning for an imminent sale following Cyrus’s backing, but is working towards an exit later down the line. Cyrus helped to provide the brand with the infrastructure and advice to scale, Vita explains. “Miley has brought not just money. The cool thing about the investment was it wasn’t just her; she got everyone in her circle to be a part of this with her. That has really allowed us to grow and helped us get to where we’re at today.” Comments, questions or feedback? Email us at feedback@voguebusiness.com.

Make better business decisions

More beauty stories from Vogue Business

Make better business decisions