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Welcome to the Big Deal.
What’s the Big Deal?
It’s one exclusive investment idea pumped straight into your inbox. It’s specific, actionable, and probably an investment idea you’ve never heard of or thought about.
If you like it, you can invest. If you hate it, you can smash the delete button.
Today, we’re looking at something completely different – it’s an FMCG brand called selfmade, and they’re pioneering the field of psychodermatology.
It’s got a super low minimum investment — just $100.
If you want to see investment opportunities specifically for accredited investors and qualified purchasers, please let me know.
Let’s get to the Big Deal
🧴 selfmade
Founded in 2020, selfmade is a mental wellness brand that creates everyday products that help you create and maintain healthy habits.
👔 Deal overview
- Investment type: SAFE (what’s a SAFE?)
- Valuation: $5m early bird then $7m
- Raising: Up to $1,235,000
- Minimum Investment: $100
- Campaign closes: September 29, 2023
- Check it out:
Dive into their super slick video to learn more.
TLDR of why I like it
It’s a massive industry with an emerging niche that selfmade is well-positioned to get in front of.
The team has a genuine story that’s easy to get behind (as an investor and a customer).
There is a good chance the brand is acquired by a beauty brand over the next few years.
What’s the investment?
This is an equity investment in selfmade via SAFE capped at $5 million for early birds and $7m thereafter. If you’re not familiar with how SAFEs work, it’s worth studying up.
Like a lot of crowdfunding campaigns, several potential perks come along with your investment.
📈 What’s the Big Deal?
🚩 The problem selfmade is solving
Gen Z has had a rough go of it, and their mental health is in far worse shape than any previous generation.
- 70% of Gen-Z say their mental health needs the most attention or improvement.
- Gen-Z is more likely to report mental health concerns than any other demographic group.
- 42% of Gen Z has received a mental health diagnosis
- 20% of Gen Z has been to therapy and 60% are on medication to help manage their mental health
- 84% of mental health Tiktok videos offered inaccurate or potentially damaging advice
While mental health issues may not be an obvious problem for a cosmetics company to solve, selfmade has a unique approach to this. More below.
More detail from Dan at selfmade:
I believe the unique problem we’re solving is that mental health tools currently available are ineffective. Mental health apps have a 3% retention after 30-days.
The problem is new habits are hard to create, they take on average 2 months to create a habit that sticks.
The solution is to make mental wellness products with credible and science backed mental health solutions EXACTLY where people ALREADY are spending time, money and care for themselves… personal care routines.
💡 The selfmade solution
selfmade is pioneering something called psychodermatology and translating the medical discipline into everyday consumer goods using proven behavioral science.
WTF is psychodermatology?
It’s an interdisciplinary field that explores the interaction between the mind and the skin. It focuses on understanding how emotional, psychological, and social factors can impact various skin conditions and, conversely, how skin conditions can affect a person’s psychological well-being.
The field combines principles from both dermatology and psychiatry to offer a holistic approach to skin care.
Psychodermatology is still a relatively new medical field, but it is gaining recognition for its comprehensive approach to treating skin conditions. It offers a more nuanced understanding that neither dermatology nor psychiatry could fully provide on their own.
It’s also gaining popularity with consumers — search volume for psychodermatology is up 45% YoY worldwide on Google. Though the growth is probably understated, because nearly 40% of Gen Z use TikTok’s or Instagram’s search function instead.
Indeed, from selfmade:
Working on our mental health and seeking new products to improve how we feel has become more popular than it’s ever been.
All selfmade’s personal care products leverage psychodermatology and take it one step further layering in proven socio-behavioral science to tackle skin issues from a deeper mental health perspective.
And that’s important to consumers.
According to YPulse data, 71% of Gen-Z consumers like it when brands make mental health a part of their marketing and messaging. Gen Zers appreciate brands that are passionate and genuinely stand for something.
All four of their products have won awards as well.
But rigorous habit-forming is possibly even more important to the selfmade solution.
And that’s what Dan’s talking about above — that by incorporating an element of self-care into your daily routine, you no longer need to worry about keeping up with a new habit — it just happens.
With this, selfmade is developing habit stacking technologies that connect the company’s beauty products into a digital platform that keeps track of users’ progress and keeps them motivated.
Beyond the altruistic rationale for developing a product that helps improve peoples’ well-being, it also creates a sort of flywheel. From selfmade’s Emotional Wellbeing Report:
selfmade’s products are inputs for both points one and two. If a beauty product can make you feel somewhere between 3x and 6x more beautiful, that’s a pretty good reason to keep using it. And if not using it makes you feel the opposite, that’s a loss you’re going to feel deeply.
I think it’s unlikely this sort of cynical maths is a calculus the selfmade team has done internally, but it’s perhaps worth noting.
💵 How does selfmade make money
selfmade sells via both retailers and DTC.
The current sales mix by channel is 70% DTC and 20% retail and 5% Amazon*.
*AMZ launched Jun’23, growing 30% month-over-month
Gross margin is 67% with the current channel mix, with improvement expected from Amazon growth.
💼 Opportunity size
“A new definition of beauty is reshaping the market as consumers shift their objectives from aesthetic perfection to holistic wellbeing.”
That’s from McKinsey’s The State of Fashion and Beauty 2023.
Clearly bullish, McKinsey projects the wellness industry to growth at 10% per annum to $1.5 trillion by 2027.
But they’ve got a warning for established brands: “Traditional beauty players need a crystal-clear, understanding of how expansion into wellness-inspired products can align with their expertise as well as their consumers’ needs and interests.”
Which is code for — there’s a lotta M&A coming down the pipe as the conglomerates hoover up brands like selfmade over the next few years.
Zooming in slightly, the psychodermatology market is forecast to grow to $115 billion by 2030.
📈 Growth potential
🚜 Traction
selfmade has been able to secure a lots of good press (just try googling psychodermatology)
- 13 features in consumer + industry forecasting
- 276+ Tracked Press Coverage
- 8 Industry Awards + Recognition, including Cosmopolitan + Vogue.
And their sales growth and retention numbers are solid
- 144% YoY revenue growth, over six-figures in total sales from an 83% average cost Margin (67%+ Net Margin)
- Average 4.8* Star Verified Reviews
- 30% Return Customer Rate (trending to 35%)
As of June 2023, selfmade was featured in four in-store retail positions.
💰 Valuation
Investors this round will get in at either $5m or $7m valuation depending on early bird status.
If those growth numbers above are correct, and if selfmade continues to grow and execute, the valuation is very fair, but it’s worth noting there are some risks to this.
Some details on previous selfmade funding:
Read up on convertible notes if you’re not already familiar with them.
🤔 The risks
selfmade lists a number of standard risks on the funding page, but these are the ones that stand out for me:
Psychodermatology is hot today but may cool off tomorrow. Trends don’t always keep going up and to the right.
Acquiring (and keeping) customers in the CPG space is both expensive and hard. Last year, selfmade spent $236k to generate $59,560 in revenue. That has to improve.
💰 How to invest
selfmade’s funding round is open now, and you can invest with a minimum of $100.
That’s it for this week.
If you have a deal you think we should share with our 95k members, please get in touch.
See you on the beaches
Disclosures
- Participation in Big Deals is a competitive process. Investment sponsors, founders, etc submit their deal, and we choose the best of the best.
- We received compensation for producing and distributing this report.
