How Sephora Is Helping Budding Female Entrepreneurs

September 9, 2016, 9:40 PM UTC
Crowds Queue For The Opening Of Sydney's First Sephora Store
SYDNEY, AUSTRALIA - DECEMBER 05: A general view inside the Sephora store before it opens the doors to its Westfield Pitt Street Mall store on December 5, 2014 in Sydney, Australia. This is the first Sephora store to open in Australia. (Photo by Mark Metcalfe/Getty Images)
Photograph by Mark Metcalfe — Getty Images

“One of my favorite TV shows is Shark Tank,” Calvin McDonald, Sephora Americas’ president and CEO, told a small group of investors and business executives in San Francisco one afternoon last week.

McDonald’s joke about the ABC television show, in which entrepreneurs pitch their businesses to often brutally skeptical investors like Mark Cuban, was timely. He was giving the opening remarks at the finale event of the company’s accelerator program for startups, Sephora Accelerate. The program, in its first year, consists of eight female-led startups in the beauty industry that are committed to a social cause. Sephora provides them with guidance and resources during the four months of the program.

Accelerate is the brainchild of Corrie Conrad, Sephora’s head of social impact and sustainability. When she joined the company in 2015 after spending eight years at Google, Sephora’s philanthropy and social good efforts were ad hoc. After surveying her coworkers’ ideas and experiences at the company (“What is Sephora to you?” was her main question), she helped design three programs to be part of Sephora Stands, the beauty retailer’s department for social good.

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Sephora Accelerate grew out of the company’s own history of bold new ideas, says Conrad. Unlike traditional department store makeup counters, Sephora, which was founded in 1969 by Dominique Mandonnaud and acquired by LVMH in 1997, lets customers in its stores test and play with products. It’s also known for carrying niche cosmetics lines, unlike department stores, which focus on the big major brands. In recent years, the company has also begun to produce its own products and collaborate with celebrities and other brands on exclusive lines of cosmetics.

Naturally, a program to support entrepreneurship was a natural fit, says Conrad. And with the persistent underrepresentation of female founders, even in the beauty industry, as she notes, Conrad zeroed in on the program’s shape. It kicked off in April with a one-week bootcamp with all eight startups’ founders in a San Francisco mansion— “Real World meets beauty,” as Conrad describes it, referring to MTV’s well-known reality television show that follows a group of seven strangers who live together for several weeks.

After that, the startups went home to continue working on their companies, along with a $2,500 grant from Sephora. They also took part in several online workshops with various experts set up by the program and regular check-ins with their assigned mentors. All eight mentors are Sephora senior employees, directors, and vice presidents, from various departments and even countries. Miguel Ochoa, finance director of the company’s Mexico business, for example, participated and mentored Stylerz, a Latin America-based service for finding and booking beauty services at local spas and salons.

“I’m super proud because she came with an idea, and through the program she’s learned so much,” Ochoa told Fortune following the startups’ presentations. Stylerz’s next challenge is to build its business model and work to become profitable, he added.

Many of the companies in the program’s first class sell cosmetics, albeit with a twist. Thrive, for example, makes vegan and cruelty-free products, and for every one it sells, it donates one to a woman going through cancer treatment through its partner organizations. Georgia-based One Love Cosmetics produces organic products in its home state, and has no outside investors, while Eu’Genia, run by a mother-daughter duo, makes shea butter-based cosmetics, whose ingredients are ethically sourced in northern Ghana and provide jobs to local residents.

“Donating is great, but won’t solve everything,” said Leila Janah, whose startup, LXMI, manufactures luxury cosmetics made out of rare ingredients found in the Nile River Valley. Janah is no stranger to building businesses with a social mission, having previously founded Samasource, which provides unemployed people in the U.S. and developing countries with online work. Janah says that she knew that retail would be important to LXMI, so joining Sephora Accelerate was a perfect opportunity to work on that mission.

Others are true technology companies. GlossGenius, for example, is a digital assistant for independent hair stylists and beauty professionals. The service, which charges monthly and transaction fees, handles a professional’s appointment scheduling, sending reminders, and even processing payment—all done via smartphone. Myavana combines hair chemistry with data and analysis. Customers can send it a sample of their hair to have it analyzed, and then receive customized recommendations of hair care products.

Following the program, the startups will have the opportunity to apply for low-interest, founder-friendly loans from Sephora for additional working capital—to help them get more inventory or fulfill a big customer order, for example. Sephora Accelerate’s financial involvement in the companies is atypical for tech startup accelerators, which usually provide several times more than Sephora’s $2,500 grant, but in exchange for equity in each startup. Y Combinator, for example, takes 7% for a $120,000 investment.

“This was not a ‘What is the financial return to Sephora?’ effort,” said Conrad when asked why the company didn’t take a stake in the companies.

Of course, there were hiccups along the way and lessons learned for next year. Conrad recounted one particular incident when her team began to reach out to startups to invite them to participate, only to be met with confusion because the program hadn’t been announced yet.

“I’m a big proponent of ‘launch and iterate,'” she laughed, putting a different spin on the common tech industry approach of constantly implementing improvements to new products.

An earlier version misstated Calvin McDonald’s job title. The story has been updated.

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