mobile-bannertablet-bannerdesktop-banner

YouTube star Michelle Phan’s beauty startup Ipsy raises $100 million

Sep 14, 2015

YouTube celebrity Michelle Phan’s startup Ipsy, which sells monthly subscriptions to “Glam Bags” full of beauty products, has raised $100 million in Series B funding from TPG Growth and Sherpa Capital. The company did not disclose its valuation, but sources familiar with the situation said the round values the company around $800 million.

Most people in the startup world haven’t heard of Ipsy, but everyone in the beauty industry has. The company competes with Birchbox, a startup that techies are more familiar with because it raised funding from traditional venture capital investors from the start.

The two companies are thought to be similar in size: Ipsy claims 1.3 million subscribers and Birchbox has more than one million. The company plans to do $150 million in revenue this year and is profitable. Back of the envelope math for Birchbox, which brings in 30% of its revenue from sales of full-sized products in addition to its $10 monthly boxes, puts its revenue in the same range.

The key difference between the two companies is that Ipsy has grown on its own cash-flow – it has raised less than $3 million in funding -- while Birchbox has taken nearly $72 million in venture capital. Last week sources told Fortune that Birchbox is preparing to raise another large new round of funding which will likely value the company at around $750 million.

Ipsy (which previously did business as MyGlam and now as Personalized Beauty Discovery), can attribute its capital efficiency to Phan’s power as a marketer. “It’s a silent little company that grew aggressively off the back of YouTube influencers,” said one investor, who asked not to be named because the deal conversations are private.

Now, with a large new pile of venture money, Ipsy’s profile will likely rise in the finance world. This may prove critical as the subscription beauty category gets a formidable new competitor: Next month, Sephora will launch its own subscription box, called Play!, in Boston, Columbus, and Cincinnati, according to reports.

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions