Lauren Hirsch, CNBC
Published 2:49 PM ET Mon, 23 Oct 2017
Image: David M. Benett/Dave Benett | Getty Images for Burberry / Huda Kattan
The price of beauty is now measured by Instagram followers (and she has more than Leonardo DiCaprio)
- Huda Beauty is working with investment bank Financo to raise money for a minority stake sale.
- The company, started and run by beauty blogger turned entrepreneur Huda
- Kattan, is emblematic of the changing beauty industry.
- Kattan is one of the top beauty influencers on social media, with follower numbers that surpass Hollywood A-listers.
The beauty blogger turned makeup entrepreneur has a social media following so vast it has provoked the question of whether she is the world’s most influential beauty blogger.
And now investors ask: what is the financial value of that influence?
The Dubai-based beauty maven is shopping a small minority stake in her company — Huda Beauty — with the help of investment bank Financo, sources familiar with the situation said. The business has
roughly $100 million in sales and is looking for a financial partner to help continue its growth, the sources added.
A valuation of the company could not be immediately determined.
The sources requested anonymity because the process is confidential. Financo declined to comment. Kattan wasn’t immediately available to comment.
The stake sale comes as the cosmetic industry undergoes deep change. Shoppers no longer choose their makeup from gussied-up ladies at the mall. In fact, they barely go the mall at all. Instead they are buying
online and at the recommendations of the personalities that checker YouTube, Instagram and other social media platforms.
Kylie Jenner sends a tweet and her lip-kit sells out. Because consumers can buy directly from her website, the need for any form of store is diminished.
Shares of Ulta, once viewed as the last man standing in retail, have declined 34 percent since June despite strong earnings and likely due to fear of e-commerce.
In response, retailers like Ulta and Sephora are launching online exclusives to draw shoppers to their webpages. Cosmetic giants like Estee Lauder are pouring money into their brand websites, looking for
a venue to communicate with — and sell directly to — customers.
They’re also making acquisitions: L’Oreal acquired social media darling NYX cosmetics for $500 million and Estee Lauder acquired Too Faced for $1.45 billion. But Too Faced and NYX combined don’t have the 22 million Instagram
followers that Kattan does. To put Kattan’s reach in perspective, she also has more Instagram followers than Leonardo Dicaprio (20.1 million), Louis Vuitton (19.5 million) and Kris Jenner (18 million).
False eyelashes and insecurities
Kattan, born and raised in the U.S., started her blog of reviews and tutorials in 2010. She later launched into makeup, selling items like lip contour sticks, false eyelashes and eye shadow kits online and at
retailers like Sephora and Harrods in the U.K. Her recent launch of #FauxFilter Foundation was so successful it sold out in 11 out of its 30 shades at Sephora within three days, according to Refinery29.
“My passion for Beauty started when I was 9 years old, mainly because I had eyebrows like Bert from Sesame Street and my sisters Mona & Alya started calling me Berta,” she writes on her YouTube page.
Her Dubai base, moreover, globalizes her appeal. Her products cater to wide range of skin tones in a way that many consumers have yearned for, which will likely help her company the same way it has boosted rival cosmetics brand Rihanna’s Fenty.
Still, gambling in a personality-led brand carries risks.
An influencer giveth what the influenced can take away. Resting the entire value of an entity on one face can heighten the risk of missteps or unforeseen events.
And as any company gets bigger, the scrutiny on the products becomes more exact. Jessica’s Alba’s Honest Company, once valued at $1.7 billion with an eye towards an IPO or blockbuster sale ran into problems when it was sued for mislabeling products natural or chemical-free. Its valuation has now been more than halved.