Jay-Z’s Firm Backs $33 Million Investment

 

Sandbridge Capital and Jay-Z’s venture capital business are investing $33 million in beauty brand Madison Reed.

Madison Reed will use the money to expand its hair color-bar presence, the firms said in their announcement Thursday. The company wants to add locations in New York City, Washington, D.C., and Chicago, hire 850 new colorists and expand its omnichannel offerings.

A spokeswoman for the company declined to share Madison Reed’s valuation but said with this new round of funding, the company will have raised $220 million total. The company’s valuation as of September was $568 million, according to PitchBook.

Sandbridge Capital is leading the investment but Marcy Venture Partners, the venture firm co-founded by Jay-Z, is also a participating investor. Marcy’s other co-founders are Jay Brown and Larry Marcus. 

Jay-Z’s Marcy Venture Partners last year invested in Avaline, a vegan wine brand from Cameron Diaz and Katherine Power, along with Gemini, a cryptocurrency platform founded by Tyler and Cameron Winklevoss.

Mr. Brown and Sandbridge Capital’s Ken Suslow will become board observers and be part of the company’s board meetings and assist with making decisions, said Amy Errett, Madison Reed’s chief executive and founder.

She declined to comment on the percentage stake the two investment firms took in Madison Reed.

Madison Reed launched in 2014 and currently has 61 color bars in the U.S. The beauty brand aims to become the hair color industry’s answer to companies like shoe retailer Zappos or glasses retailer Warby Parker. 

Madison Reed plans to operate 80 locations by the end of 2022. 

It opened its first in-person color bar in 2017, according to Ms. Errett. She says the company’s color bars are more affordable and faster than salon appointments.

Ms. Errett has said companies that make popular hair dyes use too many harsh chemicals in their products. She has found that women want options for their hair that are more natural and affordable.

Many of Madison Reed’s customers buy the company’s products themselves and take it to their stylists to use, Ms. Errett said in an interview. Most salons today don’t provide customers with the products they use on their hair, she said, but Madison Reed tries to do just that.