Welcome, everyone, to week three of our GBR Masterclass.
I am so excited to be here with you all this week and for us to have this class with one
of my favorites, Alicia Scott.
She is the founder and CEO of Range Beauty.
And Alicia has been a part of the Fearless family for some time, and I'm sure she'll
share with you all her story and what that looks like for her.
But Alicia, we are so excited to have you here, and I cannot wait for you to share with
everyone.
So I would love to introduce Alicia to our GBR students.
Thank you.
I'm so excited to be here.
Yes, I've been around for a long time.
And so my relationship started with Ariane back in 2018, I believe it was the first time
that I ever did a pitch competition.
For those who don't know, I went in, I believe it was two pitch competitions through Fearless.
I lost both of them.
And on the third competition was when I was fortunate to receive an investment and join
the Fearless Fund Portfolio Company.
So I'm so excited to share everything with you guys.
Yes, yes, yes.
So we are excited.
So Alicia, I'm going to go ahead and kick it over to you.
Okay.
I'm going to share my screen with you guys.
Okay, so today we're talking about what investors are looking for from a founder's perspective.
A little bit about what we're going to go through, a little mini introduction about
who I am for those who aren't familiar.
We're going to go through how do you know if you're investor ready, what to prepare,
what do investors want, and what do you want out of investors, where to find funding, and
then what do you do after you land an investor.
A little bit about me, I have been fortunate to scale Range Beauty to a seven-figure brand
with the significant help of pitch and grant competitions.
Since 2019, I've raised over $500,000 in grants and investments, including one that I mentioned
from Fearless Fund and one most recently from Shark Tank where I've landed two sharks.
And so I truly believe in capital helping us get to where we want to scale to.
Obviously, we have to work a lot harder than our counterparts to ensure that we're creating
successful businesses, and we really want to make sure we're snatching up as much money
as possible, and we want to make sure that we're presenting the best of ourselves when
we are having those meetings with investors.
So let's get ready to do that.
Okay, a few questions around are you even investor ready?
How do you know it's time for you to take on an investment?
So not a grant, but an actual large-size investment.
This is where you should ask yourself, okay, do I need more money, more capital,
to scale to a larger size?
So for example, when I launched in August 2018, I was approached by Target a few months
after I launched.
I had a very real meeting with the buyers, and I was fortunate that it was two black
women that I was speaking my truth to, and I was like, I just launched.
I am not ready for all of the expenses that come with retail.
And I realized that my bootstrapping efforts, I was working a nine-to-five at the time.
I went on to start getting money through grant competitions, but I realized that this
kind of piecemeal that was happening, it wasn't enough money coming at one time to help me
scale to where I want it to be, to help me get into retail, to help me expand my marketing
budget, to help me with the rebrand.
And so that's a huge question to ask yourself.
Am I trying to scale to be larger than what we are right now?
What pace do I want that to happen on?
Am I ready to take on a large sum of money?
Another question you can ask is, do I need a strategic partner or additional high-level
help?
Again, for myself, I am a solopreneur, so I don't have a co-founder.
I came into Range Beauty without a background in business, without a background in beauty,
and I really wanted to find strategic partners who had expertise in the areas that were my
weaknesses.
So, for me, that was creating a strategic marketing plan and budget.
For me, that was, how do I know the right hires?
For me, that was what's needed to go into retail and be successful in retail.
Another question is, money is needed for a long or uncertain period of time.
A lot of times with grants, it's typically under, I would say, probably 200K or less
is what your grant size is going to be.
And so when we're talking about money needed for a long time and you're going out and you're
raising what's like a Series A round or Series B round, these are large sums of money.
that you're planning on having and holding on to for typically at least two to three years.
And so this is a lot different than something that you might need in just the short term.
And then capital is needed pre-launch for development, testing, etc.
So this is similar to brands who have the idea, but they need help getting it off the ground.
So Topicals is a very popular eczema and acne brand.
They basically needed additional capital to help with lab testing, to help with formulating
because there are so many regulations around the formulas they wanted to use.
So they went out to raise in order to have the capital to launch a successful brand.
Same with, you know, you might have an app and you're showing Tractional.
We have 10,000 people signed up or we have 20,000 people interested and they really need this,
but we need additional capital to really get it off the ground and get it into launch mode.
So that's another reason why you might need a larger sum of money.
So once you ask yourself, am I investor ready?
And do I need an investor?
Here's what to prepare from my experience with range.
The biggest thing you need is a clear vision.
When I first launched Range Beauty in August 2018,
Range Beauty was clean beauty for the forgotten shades.
And when I went to pitch in my first Fearless Fund pitch competition,
the judge was like, you know, at the end of my pitch, that was a really great pitch.
You know, your energy and your passion.
I can really feel it, but I don't understand what makes you different from other makeup brands on the market.
And at this point Fancy Beauty had launched.
There are more brands coming through for deeper skin tones.
So for me saying, oh, well, we're clean beauty for the forgotten shades,
which are women of color.
It didn't really set me apart from what was already happening.
And so I had to get clear.
My clearer vision was what we are today.
Range Beauty is acne and eczema centered makeup for the forgotten shades.
So now I've niched down and what's considered a saturated or oversaturated market.
I've niched down to say this is why we're creating.
Here's who we're creating for and this is why it's needed.
So get really clear on your vision.
Get really clear on what you're creating, who you're creating it for,
the problem that you're solving.
Demonstrate potential for high growth.
So for me when I launched in 2018, August 2018, we ended the year with I think it was 20k in revenue.
By the next year, we did 45k.
By the year after that, we were in the 337,000k in revenue.
And so that was a high growth for us and we demonstrated this not only through revenue,
but we showed it through our website traffic and we saw a huge uptick.
We had around 60,000 visitors to our website.
We demonstrated this through our press callouts.
We demonstrated this through the grants that we were receiving.
So really make sure you're clear on here's why there's potential for high growth,
whether that's through pre-revenue traction or post-revenue traction.
Sustainable competitive advantage.
Going back to how I niched down to range beauty being for acne and eczema skin types
and niching down to the forgotten shades.
So mostly women of color, melanin rich skin.
So that's my sustainable competitive advantage because when I set out my landmark
and I do my competitor landscape, no one else is covering both of those bases.
And since 2018, no one has come in to disrupt that like I have.
So really make sure that you're showing here's how we're disrupting
or changing the competitive landscape now and here's how we'll continue to do so.
Of course, financial return on investment.
These people want to know how are they getting their money back?
If you can't demonstrate that clearly, that's going to be a problem.
So you want to be able to illustrate here's how you're going to get a return on this investment.
Here's what I've been able to do with $500,000.
Here's what I've been able to do putting $150,000 towards my marketing plan.
With your investment, I'll be able to 2x that which means etc, etc, etc.
So you want to demonstrate how they're going to get a return on their investment.
The use of the investment needs to be very clear.
It's not enough to say, oh, I just need it so I can have more inventory on hand.
Why? I need to have more inventory on hand because every time that we post our releases,
we sell out within the week and we have to wait to replenish our inventory
or we need to put more towards our marketing
because this is how far we've made it with our current marketing budget
and we know if we're able to add on an influx of X amount,
then we'll see this much growth from our marketing plan.
Use of investment can be towards new hires.
We are at a place where we need to bring in a CMO or Chief Marketing Officer,
CFO, Chief Financial Officer, or we need to bring on a new fulfillment center.
So really.
demonstrate where the funds are going and show why they're needed. It's not enough to stop at
because we need it. Actually show if we have this to put towards capital or sorry,
to put towards inventory, to put towards hires, to put towards marketing, to put towards product
development, et cetera, this is the return that that will bring. Because at the end of the day,
it's all about bottom line. It's about bottom line for you and your company and about bottom
line for the investor. And then a big question is definitely test every statement in your pitch deck
by asking, so what? So when you are going through your pitch deck, I know you guys already had a
class where you were putting together your pitch deck. When you go through each slide in your pitch
deck and out loud, you say, so what? You need to be able to respond to that. So if you go through
your deck and you say, oh, our ingredients are really different and that's what helps us stand
out. So what? Well, that's important because when I think about, um, the high percentage of
black women who are affected by acne and eczema, it's crucial that they have ingredients in their
skincare products that help with those skin issues. Um, my market is melanin rich black,
black women, because they have the highest buying potential when it comes to beauty and makeup.
So just being clear on why would someone care when you're demonstrating or going through and
presenting your pitch deck, some documents to get together, a target investor list. I love this
because it helps you zero in on who you would love to have be a part of your culture, be a part of
your brand, be a part of your team. And that's simply going through, it can be going through
other brands that you like that you've, you see what they're doing and you're like, oh, and you
take a peek at who their investors are. Uh, that can be by going through, um, just anyone, any VC
page, um, any list of investors. And you're saying, oh, wow, I would love to have Serena
Williams and her VC invest in my company because she's really into sun care products or going out
and saying, oh, I would really love fearless fun to invest because I love what they're doing in
the consumer goods space. So having a goal investor list is really great. And then, um, it's good too,
because you're able to zero in on investors who are helping brands that are similar to yours.
And that's important because you want someone, whether it's a VC, whether it's angel,
whether it's private, you want someone who has experience helping a company that is similar to
yours grow in the space. Another document, obviously your pitch deck, uh, your business
plan, making sure you keep that updated. Same with your pitch deck, making sure it's always
updated with any new press that you get, any new numbers that are coming in, any, um, new
traction that you're seeing, any new raises that you've had, um, income statements, balance sheets,
very, very, very crucial that you are connected to some type of, um, financial software.
QuickBooks is what we use. It's very easy. It's user-friendly, um, affordable, whether you have
someone, you know, on your team and accounting and accountant, make sure you have those up to
date and readily available financial projections that's showing, okay, by the end of this year,
we are on track to do X amount and you can have a, um, actual goal and you can have a stretch goal
for that too. And then typically investors like to see that projected out for three to five years.
Um, and that's just saying from this year, we've seen this much growth and we're going to keep on
going on this type of track and being very realistic. That doesn't mean like, oh, you know,
this year we're going to do 500,000 next year, we're doing 10 million. You really realistic with
your financial projections based on what you've been doing year over year. And then just assess
metrics and that's being able again to speak to your traction. That's huge. Being able to speak
to how many customers you have, your customer retention percentage. So how many customers are
coming back to you? Um, that's speaking to even your social media engagement, your social media
presence, press. Um, if you're in any retailers, uh, if you're having conversations with retailers,
so anything that can establish your success,
what do investors want? So I put together a list of questions, um, that you should ask yourself
about your brand or service. How innovative is the business or service model? Investors are always
trying to find the next unicorn, right? They're always trying to find the next big thing.
And we're not saying every brand is going to be Airbnb. No, but you definitely want to be able
to show off. Here's how I am innovating in this space. We're not reinventing the wheel,
but here's how we're making adjustments. Here's how I'm making these adjustments because we
reached out to, you know, 500 women and they said that they would like to see this in beauty,
or we reached out to 200 women and they said that this is what they would like.
to see in the food space or having some type of data
to support why you're creating what you're creating
and displaying that no one else is doing that.
What is the size of the market opportunity?
Again, that's zeroing in on the large market
and kind of going down to your industry.
So if we think about beauty
and the black woman buying power and beauty, 7.5 billion.
Okay, from there you trickle down
to what that looks like for your competitor landscape.
So looking at how much they're basically raking in
across competitors, and then from that zeroing in
on what percentage of your revenue
makes up that total landscape.
So what size is your market opportunity?
Can the investor add value to the scaling of the venture?
This is a really great question
because it adds to saying
that I haven't done everything that I can do.
So it's saying with me on board,
here's the value that I'm adding to this brand.
Here's the value that I'm going to be able to use
to bring it to an even larger size.
So that might be your network.
That might be your customer list.
That might be your retailer relationships.
That might be your patents.
So thinking about what additional value.
It might be your background.
You might be very experienced in product development.
You might be very experienced in marketing, sales,
what have you.
So what value, additional value
do you bring to scale in the venture?
Do you confidently know your metrics?
This is very important.
You don't want to have an investor
ask you about something,
ask you about your customer acquisition costs,
ask you about how many visitors are hitting your website,
ask you about what is your customer retention,
and you are staring at them blank face
because you don't know the answer.
Make sure that you're really going through
and understanding and studying your business
so that no matter what question is asked of you,
you're able to respond.
Unless it's something that's really just out of left field
and you have to hit them with,
I'm unsure about that stat,
but give me a moment and I'll be able to get back to you.
Really anything else is pretty standard across investors
when they're asking,
really just trying to figure out
how much value you have in your company
or how valuable it is.
And you should be able to know those stats at all times.
A recent question that I've been seeing is,
is there social impact?
So just from even pitch competitions
or grant applications that I've been seeing,
recent conversations with investors,
there is this new,
we wanna know what you're doing
beyond your brand, beyond your service.
How are you giving back to the community?
Is there a donation or some type of social impact?
Are you helping because your brand is sustainable?
Are you helping because your products are recyclable?
Are you helping because you're working with a co-op in Ghana
that helps produce the shea butter that you're using?
So what is your social impact?
What are you doing beyond your product and service?
And then some things to remember when presenting,
be passionate about your story.
A big part of my brand is my founder story.
I created Range Beauty because I developed eczema and acne.
And at the same time,
I noticed a huge lack of makeup shades
available to deeper skin tones
while working behind the scenes in the fashion industry.
And so I took it upon myself to create a brand
that merged both of those worlds together
because no one else was creating it for us.
So you want to have an actual founder story
that is interwoven into your brand or service.
And you don't wanna say,
oh, it's just this really cool.
No, come confident, come bold,
and tell them why you create this
and why they need to be on board.
A lot of times investors will say,
I invested in the founder first,
and then the brand second,
because they believe so much in your story
and they believe so much in what you created and why,
that's what hooked them.
Knowledge of your industry, of course.
A big thing is when people say,
oh, who are your competitors?
And sometimes I hear,
oh, I don't have any competitors,
no one's doing what I'm doing.
No, like be knowledgeable about your industry.
You can say, here are my competitors
and here are the marks that they're hitting,
which are not similar to the ones that I'm hitting.
Knowledge of your market size,
knowledge of your ingredients,
knowledge of what others are doing in the space,
knowledge of where you see yourself
on the retail landscape,
knowledge of where you see your brand going
within two to three years, five years.
So knowledge of your industry, knowledge of your brand.
Customer traction, I've said that so many times,
but really, really demonstrating
that there is a demand for your product or service
is so crucial.
And being able to do that
through whatever stats you have available,
like I said, pre-revenue, if you have email signups,
oh, I have an email list of 15,000 people
who are waiting to get their hands on this product
or on this app.
Or we already have,
12,000 people subscribe to our app.
So that could be a pre-revenue, it could also be a post.
We already have 5,000 people
who have monthly subscriptions through us.
We have this much in revenue,
we have this much in profit, et cetera.
Leadership ability.
So you wanna be able to demonstrate
that you can lead a team.
You want to be able to demonstrate
that you can make decisions easily,
that you can work together with a team.
So really demonstrating your leadership ability.
Team members.
A big thing that I ran into when I was early on
trying to talk to investors,
they asked, well, who else is on your team?
And it was just me, myself, and I.
And I was like, me, myself, and I.
They're like, okay.
A big red flag for investors is if it's just typically you,
that means that, okay,
how are we gonna be able to manage this brand
and this service if she doesn't have any additional help?
A lot of times, they're like,
okay, yes, we wanna be a strategic partner.
We want to give you the capital.
We want to help you in the areas that we can,
but they're not going to be there
to hold your hand every day, 24-7.
So they wanna make sure you have the support
through other team members.
And this doesn't always mean it has to be full-time members.
That doesn't mean you have to run
and find a co-founder if you don't have one.
It can simply be, oh, we have a social media team.
It can be, we have a fulfillment center.
It can be, I have an operations manager.
Just making sure you are able to demonstrate
that you have other team members.
It can be your mentors.
It can be your lab.
So demonstrating that there are others outside of yourself
so it doesn't seem like everything will fall on you,
which means that everything
will probably fall through the cracks.
A realistic vision.
So as I mentioned earlier,
not coming out the woodwork with just crazy numbers
and a crazy vision,
actually having a strategy behind what you're building,
having a strategy behind your numbers,
how you arrived at those numbers.
And then coachability.
So some investors come in
and they see where your weaknesses are,
or you tell them where your weaknesses are
and they try to give you the help that you need.
If you're very kind of stagnant and just,
no, I got it, I don't need it.
I'm just gonna keep doing it my way,
or you're not taking on the help
that they're trying to give you,
that means that you're not coachable.
And the reason they're coming on
is to be a strategic partner for you
to help you grow this thing.
So you want to be able to, yes,
stick to what's true to your brand,
to your brand vision,
vision to your brand voice,
but also take on feedback
and any critique that will help you grow
as a better founder
and help you grow your business
to get to a better place.
An important thing to know
when you're speaking to investors
that this is just as much an interview for them
as it is for you.
It's like you guys are dating.
You're trying to date to find the right investor.
It's speed dating, really.
And so these are questions
that are for both sides, the four Cs.
So competence,
do you have the skillset to build the business?
And again, this is just demonstrating
through whatever experience you have
to bring to this business,
demonstrating this through whatever traction
you've already been able to build up to this point,
demonstrating this through who you've hired.
So just demonstrating you have the skillset
to build the business beyond where you've built it.
Commitment, are you going to see the brand through the end?
This is huge because investors, as I mentioned,
are sometimes investing in you
as much as they're investing in the company.
So they want to make sure,
are you in this with me?
Are we taking this to the exit?
Are we taking this to whatever it is?
And you're really here and you're committed
and you're going to give it your all as best as you can.
You're not going to land the investor
and then kick up your feet and be like, okay,
I don't have to do anything more.
Like the real work is going to start.
So they want to make sure you're committed
to see the brand through the end
and make it as successful as possible,
just as much as they want to.
Connections, do you have the networks to build the company?
And this is very important because yes,
investors will bring their own networks,
they'll bring their own resources,
but they also want to see what you're able to bring
from your end.
So the two way question there is you want to know
that the investors have resources and networks
and you want to know who is within their network.
And it's the same with you, who's in your network,
who has been helping you thus far,
who can you lean on if needed
or go to for the future of the brand.
Chemistry, is there chemistry between you
and between the investors?
Again, question for you and for the investors.
I met with some investors and off the bat,
probably two minutes into us speaking,
I knew that they weren't going to be the investor for me.
And that's something that's very important
because this is going to be someone that's on your team.
This is someone you're going to work with
for a pretty decent amount of time.
And so you want to make sure the chemistry is there.
You want to make sure you actually like each other.
I say, is this someone that you would actually be okay
with getting on the phone every other day?
Or would you like, oh, I can't believe.
Let's talk to this person.
You want to look forward to talking to them.
And you don't want there to be any friction between you guys
because there's going to be a merge of ideas.
There's going to be some feedback coming through.
There's going to be, oh, I think we should do it this way.
No, I think we should do it this way
and having to find common ground.
So making sure that there's chemistry there.
And those first two, it's the same for you.
So making sure that they have the skillset
to build the business,
making sure that they've invested in, like I said,
companies that are similar to you.
If you're in the consumer goods space
and you're looking at them
and they've only invested in really like apps
or something similar to that,
then that's not going to be the investor for you most likely.
So you want to make sure that this is going to be
the investor for you based on their portfolio.
And it's the same just like at a job
when they ask you for references,
it's really great to tap into brands
that they've invested in and ask them for references
and speak to the founders and say,
hey, I was having a conversation with X, Y, and Z investor
and I understand that you're in their portfolio.
If you don't mind sharing
how the partnership has been with them,
that would be really great.
And commitment, making sure that they're here
to see the brand through the end,
that they're here to make sure that you have
as successful as a brand as possible,
especially with their help.
Okay, finding funding.
So I kind of put this into three buckets
that I've seen through my journey.
And the first one is network.
So checking your circle.
And yes, of course, people are always like,
oh, go to your family and friends and try to raise, yes.
But checking your circle also means other founders
through your journey, building a brand or service.
I really hope that you guys
are building out your founder circle,
building out your founder family.
That is very important.
A lot of times, a lot of these conversations I have
with founders in my circle, I'll ask them,
oh, have you worked with this warehouse before?
And they're like, oh my gosh, let me tell you about,
you know, why you shouldn't work with this warehouse.
Or, oh, I'm thinking of going with this retailer.
Well, make sure that you get X, Y, and Z in order
because this is what they ask for.
So making sure you have a circle of founders
in different areas of the journey.
So this could be founders who have sold their company.
This can be founders who are basically
in kind of in the same pace that you are.
Founders above you who have gone into retail.
Maybe you haven't gone into retail,
who have gained investors.
Maybe you haven't gained an investor.
It could be, you know, just founders in different spaces.
It doesn't necessarily have to be in your industry,
but you really want to make sure
you have a good circle around you
because a lot of times these founders
will also be able to say, hey,
this VC didn't work for me,
or this investor didn't work for me,
or wow, this investor is really looking
for black women-owned brands in the consumer goods space
who are creating products in the haircare industry.
And I highly recommend you speak to them.
Actually, I can make the introduction for you if you'd like.
So checking in your network to see
if there are other founders who have raised,
who have begin raising,
and might have some references for you.
And then another one is networking events.
So there are different events that happen around investors.
I know there was one earlier this year
that was aimed towards black-owned brands,
and it was a virtual conference.
You got to hear from different investors,
and then you got to go one-on-one
into little brainstorming rooms with them,
and give your pitch, and get their feedback,
and then you also have their contact.
So looking into those networking events as well.
So there's non-equity funding.
That's the crowdfunding loans grant.
So I'm huge on grants.
It's just, it's free money.
It's free money, so you have to pay taxes on it,
but other than that, it's free money
that you don't have to pay back to the company,
or a person, or whomever you received the grant from.
And with loans, that is obviously something
that you have to pay back.
Sometimes they might have a high interest rate.
Sometimes banks or loan servicers
may not give you a loan for your company.
And then there's also crowdfunding.
And crowdfunding, iFundWomen is a great platform for this.
It's for women-owned businesses,
and it's similar to all the other crowdfunding businesses,
except I really like it because of how they promote
for women-owned businesses.
I like that if you don't reach your goal,
you still get to receive whatever money it is
that you've made up to that point.
They keep you within the network.
So it's a really great platform for you guys to tap into
if you're interested in crowdfunding.
They have lots of different free sessions
educating you on how to set yourself up
for success with crowdfunding.
And they also post about different grants
that they give out.
Uh, new voices is a huge, huge, huge, huge, huge, um, investor
and black women owned businesses.
Uh, this was started by Rich Lou Dennis who previously owned Shea
moisture and currently owns essence.
And he has poured hundreds of millions of dollars back into black women
owned businesses, both through grants and through investments.
Um, black girl ventures is another one that they pour through
grants and invest investments.
Um, the small business, um, this one's a little bit stricter than other,
um, grants or, um, other providers.
So for the small business site, um, they're really great because they have
loans for government based, um, like contracts, uh, they have loans through,
um, just through their small business administration for your brand.
So that's another one to tap into for loans.
And then fund black founders is another great site for crowdfunding as well.
And so if you're ready for equity investors, there's
different equity investors.
Um, there's VC like fearless fund angel, and then private, and I've
listed just a few, um, Harlem capital is another one that is catered
towards black on brands, black angel tech fund, obviously catered towards
black owned tech brands and services.
Cleo capital is geared towards black owned brands.
Um, and so deciding where you fall within this, it can be all over the board.
It can be, you know, you tap into your network.
You're also getting grants.
You might've taken out a loan, you've done crowdfunding, and now
you're ready to get an investor.
So finding where you are in your journey and what's best for you.
Um, and again, making sure that you're tapping into the different brands
that have received something through, through one of these buckets.
So I know for me, um, I received a grant through the glossier program, uh, last
year, and they were saying, you know, if you have any, uh, founders that, you
know, that, you know, we could reach out to, or we should keep on our
radar for our next round, let us know.
And so really making sure that you're really utilizing your network.
I cannot stress that enough.
Okay.
What's next.
If you're hitting a wall with investors, so you have refined your pitch deck,
you've now gone out to the investors, you have your figures ready, you know,
your stats, you know, your industry, you are, you feel like you are just armed
with everything you need to be armed with.
If an investor tells, you know, the first thing I say is to review any feedback
or questions the investor raised.
So you might go in and say, you know, well, last year we had a
50,000 people on our website.
And this year we had around 30,000 people on our website, but this was our revenue.
And so the investor might say, oh, what do you think accounted for
the drop in website visitors?
Like, what do you think, you know, accounted for the drop in demand or
whatever, and maybe your response that wasn't concrete enough for the investor.
So going through any questions that the investor has raised or any
feedback that they have raised.
One, if it's seriously applicable to you, and then two, going back and
adjusting what you need to, and preparing what you need to for the
next investor meeting that you have.
A big one is ask the investors who gave you a no for other referrals.
So a lot of times you might kick it off with this investor.
You guys are on zoom or in person and it's going so well.
Everything is really flowing together and you, in your mind, you're like, oh,
we're hitting it off.
This is going to be a deal.
And at the end of the conversation, they're like, you know what, this just,
I really, really enjoy you, but honestly, this isn't for me.
You know, I really need to see a higher revenue amount or, you know, I really
enjoy you, but this just, my expertise really isn't in hair care or my
expertise really isn't in food.
Do not get off that call without saying, you know, I really enjoyed this meeting
with you too, and I completely agree with you on this, but I really need to
you know, I really enjoyed this meeting with you too.
And I completely understand by chance.
Do you have anyone in your network that might be interested in seeing my pitch
deck? Do you mind if I give you my pitch deck to share with someone in your
network? Like making sure you're utilizing that relationship to get another
referral. Um, and making sure that they might on their own say, you know what,
I'm going to push this yet. I will push this out to my circle.
I remember I met with an investor and she was like, oh, every other Friday,
we have a women's group that meets and we present pitches that came across our
table. I'm going to bring you to that meeting.
I'm going to bring your pitch deck to that meeting.
So making sure that you still try to end that call if it went well and seemingly
in your favor, trying to get something else out of the call.
And then if you're continuing to hit these roadblocks with investors,
I say look towards alternative funding. In the meantime, again,
going back to the crowd funding.
the grants, the loans, making sure that you're tapping into other streams of capital, if that's
what you need at the moment, in order for you to still continue to build the company until you're
landing an investor. And then what's next? You grab an investor's interest. Congratulations.
What does that mean? So with grabbing an investor's interest, this is where
I say the really hard part comes, and that's the business and legal due diligence will commence.
For those that don't know, I taped with Shark Tank in July of last year. I landed two sharks,
Lori and Emma, and I am still under due diligence. And so it can be a long period. It could be a
short period. It could take up to eight months. It could take two to three months, and you guys
close the deal. You get the money. We're moving forward. So just be prepared. And again,
this goes back to making sure you have your documents in order, making sure you have an
attorney ready to review any term sheets, any documents that come across your way.
And so this is when everything is going through. They're going through all of your financial
records. They're going through your balance sheets. They're going through your income
statements. They're going through your tax returns. Okay. So making sure you have everything
in order. Inform your team of the new investor coming on board. So a lot of times with an
investor coming on board, there might be terms where they're saying they now might have a seat
on your board. They might now have a say-so over any salary changes. They might now have a say-so
over any large purchases the company is going to make. They might have a say-so in any new
investors you're bringing on. So informing your team, not keeping them in the dark, sharing as
much as you'd like with them, but letting them know, hey, we now have another partner coming in,
and here's how this is going to adjust the way that we're currently doing things.
And then post-close, keep financial reporting up to date. So a lot of times within terms,
it might say we want quarterly reporting. It might be monthly reports about what's going on with your
financial data. And then sending over any new updates. So having a separate newsletter for
your investor, for any partners, and having them BCC. And sharing any new updates. Sharing, oh my
gosh, I was just on Shark Tank. Sharing, oh wow, we finally landed this retailer. Sharing we are
going to be on BET. We're going to be at this festival. We're going to be speaking at this
conference, whatever. Keeping them updated on any new updates or traction that's happening with you
as a founder and with your company as well. And that is going to conclude the presentation.
And so I will kick it over for any questions. Let me see.
Okay. What site references can you provide us to determine stats, metrics, etc? Example,
census.gov, Matrillo. Okay, yes. So this is kind of two parts. So for your stats and metrics,
these should be directly through your company data. So for example, if you're on Shopify,
making sure that you're able to pull any of that data, making sure you're using QuickBooks
for any of that data. Aside from that, if you're looking for industry metrics, yes, a good one is
census.gov. Another one is, sorry, I'm blinking. But it gives you the reports of what's going on
in your industry. And it breaks it down to beauty. It breaks it down to whatever service you're in.
So looking for industry-specific reports. Looking towards any kind of industry-specific
metrics. Looking towards any industry-specific stats that have been registered. Looking at any
research that has been done. Specifically, if you're looking for stats around your ingredients,
stats around what women are needing, what men are needing. So honestly, utilizing Google to the best
of your advantage. That is the key for me. I typed in, honestly, how many Black women are
dealing with acne and eczema? And thousands of reports came up describing how much we are facing
that at larger amounts, at larger percentages, which I was able to use within my pitch deck,
which I'm able to use when I speak about why I created Range. So really utilizing Google for that.
What is your business structure? Are you a C-Corp, Benefit Corp, LLC? Okay, that's a really great
question. When I started Range Beauty, I started as an LLC. To prepare for investment, I transitioned
from LLC to a C-Corp, to a Delaware C-Corp. And the reason it's a Delaware C-Corp is because
it's a C-Corp that's a C-Corp that's a C-Corp that's a C-Corp that's a C-Corp that's a C-Corp
Delaware C-Corp is because basically,
Delaware is kind of the standard across investments.
So investors like to see that you are
registered as a C-Corp, it just makes it easier,
it makes it easier for taxes,
it makes it easier for investments.
And so for us, we are Delaware Registered C-Corp,
and we are a foreign entity LLC within Georgia,
which is where we're based.
How do you decide what percentage to give an investor?
That's a great question.
So that boils down to when we get into valuation.
So the valuation is the present value of your company today.
So there's pre-valuation and there's post-valuation.
Pre-valuation is what the value of your company is today,
post-valuation is what your company is valued at
after the investment lands.
So for us, once you land your valuation,
and you break down, okay, that means if I give away
8% of my company for $200,000,
that means that the value of my company is $2 million today.
My company is valued at $2 million.
So post-valuation, my company will be valued
at $2,200,000, right?
So it's going to see, it's breaking down
what your valuation is and seeing how much equity
you're comfortable giving up with and why.
So saying, okay, well, my valuation is $2 million,
I'm not gonna give away 20% for $200,000
because that means that my valuation
would be lower than $2 million.
And I think it's also important to understand
what your strategy is with your company.
So if you have an exit plan, if you're saying,
I would like to sell my company within five years,
knowing how much you would be comfortable
with owning of your brand within five years.
Do you wanna own 80% of your company when you sell?
Do you wanna own 50?
Are you okay with owning 20% when you sell?
And making sure that you're making those adjustments
as you go through these investment rounds,
as you're going through your series rounds
and making sure you're not giving up too much equity
in any of your rounds to leave you with enough of the pie
when you sell or as you hold on to the band.
What are the boundaries for investors?
How do you know if investors should make decisions
in your brand, or they should just be someone
who gives the financial support of the brand?
Great question.
Okay, so for me, I knew that I was ready
for a strategic partner.
I knew that I was ready for someone
who would actually partner with me
that I could sit down with and speak to about,
here's what you should be doing with marketing
because this is our expertise.
Here's what you should be doing with product development.
Here's what you should be doing
when speaking to these retailers.
Those were the areas I wanted help with.
So I didn't want someone who was just going to give the money
and kind of sit back and kick their feet up.
There are absolutely investors who are available
to just say, okay, I'm giving you the money
and I'm kind of like a silent partner in that sense
where I'm giving you the money, send over your reports.
If you need me, I'm here.
If not, cool.
And just let you go on and do your own thing.
There are some investors who you present to
and they're saying, okay, great.
I want to be able to have more say-so
in these areas of your company.
And you have to ask yourself if that's okay with you.
You have to ask yourself if that's okay
if someone is coming in and wants to overhaul
your marketing department or strategy.
You want to be okay if someone is coming in
and wants to overhaul your supply chain management.
So that's asking yourself, do you want someone who's silent
or do you want someone who's going to partner
to strengthen these areas with you?
Do you need to have an exit plan ready?
What if you don't see yourself selling for years?
Again, so this comes down to the brand
that you're trying to build.
Are you trying to build a legacy brand?
That's completely fine if you don't have an exit
and you're saying, this is something
that I know I'm going to want to hold on to.
That's going to take a lot more capital
versus if you have an exit strategy,
but it doesn't mean that that can't be an option for you.
The exit strategy comes into place.
It doesn't need to say, oh, I'm trying to exit next year
and you just launched last year.
No, be realistic.
Okay, I know that there's still this amount of work
to do in this space.
Here's how much I know that we can still gain
with me at the helm in this space.
So my exit strategy is set for five years from now.
Within five years, I want to be able to sell my company
at X amount.
And so you can be on both sides.
You don't have to force yourself to be exit ready.
I will say a lot of investors do tend to favor those
who are exit ready because that means
that they're getting their money back and then some.
And so they do, I think, prefer those who are exit ready,
but if that's not the plan that you have for your brand,
it doesn't have to be.
Are there any best practices on how to represent community social media metrics?
There is a perception that social media metrics are a bit soft,
but in today's world, that's how most brands are speaking to their customers
and takes up a sizable time and effort investment.
Yes, so for metrics, when it comes down to social media metrics in community,
I would say the biggest thing is showcasing your engagement
because you can have a hundred thousand followers,
but if your engagement is 1%, that doesn't mean anything.
You want to demonstrate you have an engaged community.
So that's breaking down how many people or what your engagement percentage,
your engagement rate is that is demonstrating if you're able to showcase.
So let's say you use Instagram and you can set up your Instagram shop through the Facebook platform.
So then you're able to demonstrate, wow,
this amount of our sales come through the Instagram
and Facebook platforms through their shop section.
So that's the way that you can demonstrate your presence on social media.
You can use your metrics through social media when you even run polls.
If you have, you know, 10,000 followers
and you put up a poll asking what you want to see in ingredients,
what they want to see in packaging, what they want to see different in the landscape of beauty,
you can use that to your advantage and say, hey, out of 5,000 people who were surveyed,
X amount said that this ingredient is very important to them
or this product is a must-have for them, but they're not seeing it created in the market yet.
So utilizing things outside of just followers to demonstrate your metrics on social media.
What do you believe are the core members of your team
or contractors you should have before citing for investors
so they know you're not just a one-woman show?
Okay. So for me, my first real hire was an operations manager.
This person helps with supply chain. She helps with fulfillment.
She helps with any inventory issues.
So that was who was the first person I named on my team.
I have an operations manager. I have a customer service representative.
So that means that you're not leaving customers off to the wayside.
They want to know who else is talking to the customers.
It can't just be you all the time.
So saying I have customer service rep, social media management,
who's making sure that you're maintaining your presence across these social media platforms
and making sure that you're staying relevant.
So social media management, some type of, if you don't have like a CMO or sorry, CFO,
like someone within the finance room.
So I have an accountant. I have, it can be on contract, doesn't have to be full-time.
And then the big one, the other big one was a fulfillment center.
So I have a 3PL. So that means, okay, if you have an influx in orders,
who else, aside from yourself, is going to be packing these orders?
Who else is helping you with the strict regulations
and guidelines that retailers have when you have to pack and ship orders?
So those were my core call-outs.
And then along with that, I have some heavy hitters on my mentor team.
So calling out that I have Bobby Brown as my mentor was a really big one.
Calling out that I have the support of the Glossier C-suite was a big one for me as well.
Do the investors have a percentage of your company or just equity ownership?
So if you have, if it's an equity investment,
that means that you're giving up a percentage of your common stock typically.
So that means that you're giving up shares in your company.
So they do have a percentage of your company, if that answers your question.
So it's still, they have, they are still owning shares.
They're still owning a percentage if you're giving away equity in exchange for capital.
Oh, and something to think about too, a lot of times investors will come in on the basis
of a convertible note before it converts to the percentage of your company.
So the convertible note, for one, it makes it easier and quicker to close the investment.
And that's typically, it kind of looks like a loan.
So they're giving you the capital and they're saying, typically within 18 months or more,
basically there's going to be a decision from the investor to say,
okay, after this amount of time, this convertible note,
so this investment that I just gave you will convert into equity,
the equity that we agreed upon.
Or at this time, that means that you need to pay back the money with any interest.
How has your experience been working with your investors and your decisions?
You mentioned a strategic partner, which is good to know that's an option.
Do you still feel like you have a sense of freedom with your company?
Great question. I was fortunate to land an amazing,
amazing first investor with Fearless Fund.
They have been helpful whenever I say, hey,
the areas I need help with, marketing, networking, whatever, they are there to help. And that's
important to me because the biggest part of their vision is making sure that they see
success within Black women-owned brands. And so that was important to me because I wanted
someone who understood what I was building, who understood the industry that I was in,
and understood where I was trying to go. And that would also make it easy when I bring
on other investors. You don't want to have an investor who makes it difficult for you
to work with other investors because of their terms, because of any ownership they're trying
to have over your company. You don't want to have any friction between building your
investors if that's the path that you're going on. And so for me, I've been fortunate to
have really great investors. My most recent investor, Emma Greed, she has been incredible.
She has been a true strategic partner as well. So I'm very intentional about who I'm bringing
onto my cap table, and I suggest everyone to be the same way. And I do definitely absolutely
still have freedom with my company. How has it been working with Target? Have you enjoyed
the experience with them? Target has been a phenomenal partner. I went through their
accelerator back in 2020. I went through Target Takeoff Beauty, which was an immense, immense
help for me in knowing what it's like to have a retailer partner such as Target. They take
you completely behind the scenes and share just so much knowledge with you that you
would not get elsewhere. For me, honestly, we started with them on .com because we launched
during the pandemic, and it was just easier. It was more strategic, and it was the best
thing for us because our price point is higher than beauty brands that are in Target. So
it was a great way to test out that market, test out the customers, and see what was next
for us. But it has been a great partnership with them.
I think that's the last question.
Yes. Thank you so much, Alicia. That was awesome. You gave so much information. Thank you for
coming. There was someone who did ask something that I thought was worth mentioning. How did
you find mentors such as someone as big as Bobby Brown?
Yes. So again, social media presence, y'all. I'm telling you, if your social media pages,
your personal and your brand pages are not put together. Target reached out to me via
DM on my personal page. Bobby Brown reached out to me via DM on my brand page. So she
actually reached out to me. She was someone that I've always admired. She DMed on the
brand page and was just like, love what you're doing in this space. Would love to get on
the call. And I was like,
Of course.
Like, are you asking?
Are you for real? And then she sent her phone number. And I was like, Oh, and I told her
on the call. I thought you were joking. She's like, No, I really want to talk to you. You
know, I would really let you know, we were on the phone for around an hour. And she would
honestly asked me outright, you know, I would really love to be your mentor, if you would
be interested in that. And I absolutely accepted. And so I, yes, I and I was really
fortunate. Obviously, that's not something that happens every day, which I'm aware of.
But I honestly, again, tap into your network, tap into some of these founders that you
really admire, some of these brand owners you really admire and see if they would be
willing to take on a mentee. I know there was a recent share of different pages or like
different networks where you can find black women mentors as well. So again, hop on
Google, see how you can find a mentor, but definitely try and tap into your network or
just honestly reach out to the founder of a brand that you admire, cold DM, cold email,
and ask them if they would be open to being your mentor.
Thank you so much for all of that information. We are at the close of our masterclass. So you
all make sure that you sign in. The link is in the description chat. So where you see
Alicia's bio, the takeaways, and there's a link that says to log your attendance, please
click this link, click that link. If you are not able to see it, for whatever reason, I'm
going to go ahead and put it in the chat right now, so that you have it and you can copy and
paste it. And you can go ahead and sign that I will leave the sign in link open until 810.
And then after that, I will close it out. But thank you all so much for tuning in greatly
appreciate Alicia coming on and sharing all of this information. And know that the
presentation will be in the the portal for you all to rewatch and watch the replay and the
presentation will also be in the Mighty Portal. So see you all next week.
Thank you.