The emerging beauty technology space offers many business opportunities. To ensure that Black communities are able to seize them, the Hair Caire Revolution UK collective recently hosted an event in London where a panel of Black beauty professionals gave their insights into the sector.
The speakers at the Microsoft Reactor included Lauren Mathurin, senior vice president at Silicone Valley Bank; Eve Ladeji, product manager at Collagerie, Women in Software Powerlist Winner 2022; Zina Alfa, founder of a beauty technology turned venture capital start-up at Antler; Hannah Naomi Fisayo, vertical head of digital beauty and luxury at Snapchat and Ovi King, hair care product expert and founder of a beauty technology at Cosmetics Ai, a start-up that provides consumers with technology-based cosmetic care.
From the beginning, all speakers agreed on one thing: the beauty sector is moving in the right direction, and there is a lot to accomplish for Black entrepreneurs and techies. “We can see an industry transforming in front of us; there has been so much change, not only in the way products are marketed, but in how people think and feel about their own hair and themselves,” said Zina Alfa.
Financing for Black entrepreneurs was also one of the most important topics of the conversation as, despite the growth of the sector, this remains one of the main obstacles.
One of the first challenges is that UK investors don’t really understand the potential of the Black beauty market. “In the UK, Black-founded businesses have great potential, but they’re not emerging because investors don’t understand that it’s a multi-billion dollar industry,” said Lauren Mathurin.
In terms of market size, the beauty industry has grown from $483 billion in 2020 to $511 billion in 2021. This compound annual growth rate of 4.75% worldwide is expected to exceed $716 billion in 2025. And $784.6 billion in 2027, according to 2022 Beauty Industry Trends & Cosmetics Marketing.
Lack of representation
Mathurin added: “In the UK, there are dedicated funds for Black or diverse founders, but they also struggle to close their funds themselves. There’s also a bigger issue of having people who look like us making these decisions, who understand what the money and the market and the space are for; and that’s what we’re trying to do. But we need more”.
If you compare it to the US, it’s a completely different game. Millions of dollars are invested in this sector. There are a lot of Black investors in the US. It’s not just individuals, there are whole funds dedicated to Black founders, making sure they have the same opportunities.
Zina Alfa, who also operates in the investment sector, described a “systemic” problem and advised Black beauty entrepreneurs to be resilient. “Only 2% of funding goes to women of colour. That’s very little compared to the number of women who are starting their businesses and deserve to have access to that money.”
She continued: “These factors have become systemic, and it will take time to break them, and if we are more aware of them, we will have the responsibility to change them. Because ultimately, we want to have a stake in this area that has eluded us for so long.”
Focus on technology
When it comes to finding solutions to stand out in a field where many people want a piece of the pie, technology becomes the best tool to create the best product, even when you are a small business.
“Today, the biggest barrier is accessing. I just want to have access to everything very quickly,” said Eve Ladeji.
Fast access offers many opportunities for e-commerce development and is an exciting area to explore for Afro beauty tech entrepreneurs. As consumers around the world increase their online engagement and spending, DTC e-commerce is becoming increasingly popular for brands. By 2023, e-commerce is expected to account for 48% of beauty product sales.
In addition, AI and AR technology are fast becoming a crucial part of a beauty brand’s digital transformation strategy and beauty tech innovations, as more and more shoppers are accustomed to buying online and are looking for more customisation options.
Ovi King recommended that all entrepreneurs look at intuitive systems using logic and AI and all sorts of things to be able to give you results and allow you to convert more. So AI creates additional revenue, but it remains exclusive when you are not Caucasian. “We all know we need better Black Beauty spaces. And we should bring that into the apps. In fashion. etc. “
Ladeji continued: “You’ve probably all seen augmented reality and how to use it and e-commerce. It’s all technology. Think about how you consume things and problems and what you’re going to do to help solve your problems. And think about the power of all this”.
Power of social media
Digitalisation is key. At a time when personalisation is making a real difference, Hannah Naomi Fisayo believes Black entrepreneurs have a real card to play with marketing, and storytelling on social media.
“I think it’s something that a lot of companies in this type of industry don’t do as much as other verticals. It’s kind of including advertising and marketing in your strategy as well. Don’t underestimate this lever”.
Especially since 63% of skincare shoppers go to YouTube on a daily basis, followed by Facebook (56%) and Instagram (49%). Their main reasons for using social media are to follow news or events (43%), and 36% use it to research brands, Beauty Trends Report, 2021.