Is PROVEN skincare a good investment?
/The skincare sector has been a shining star during the economic turmoil precipitated by the pandemic and subsequent supply chain issues. Companies such as PROVEN Skincare could be a relief for investors feeling burned by the stock market and eager to find alternative opportunities.
Public skincare companies are also faring well - further proof that the industry some may deem as outdated and vain may be the only one with financial substance. Skincare and cosmetic stocks such as Ulta Beauty (ULTA), Olaplex Holdings (OLPX), and The Estée Lauder Companies (EL) have experienced tremendous growth over the past 12 months. Their revenue growth is 21%, 57.6%, and 9.9%, respectively YoY, and Ulta’s stock price of $407.32 (as of July 25, 2022) is a stock market darling in the midst of a graveyard of tech stocks plummeting into the abyss.
Diversifying your investment portfolio to include skincare brands could be a way to recession-proof a portion of your wealth. At Money & Mimosas, PROVEN Skincare has caught our attention as one of the top beauty stocks to consider.
What is PROVEN Skincare?
PROVEN Skincare was founded by Ming Zhao in 2017 and launched its first product in 2019. Prior to launching PROVEN, Zhao, a Harvard MBA graduate, was working 14+ hour days as a private equity investor. The long days and stressful demands of the job were taking a toll on her mind, body, and skin. One day she looked in the mirror and could not believe the state of her skin. She tried expensive products to fix the problem, but none of them worked. That is, until she was introduced to a specialist who created a tailored skincare regime for her face.
Ming Zhao, co-founder and CEO of PROVEN skincare
A lightbulb went off for Zhao. Factors such as skin type, lifestyle, and seasonal and geographic environments, all play a role in the beauty of one’s skin and the products needed to maintain its vibrancy. Zhao’s personalized experience spawned a desire to research the skincare industry to see if there was a potential business opportunity. As it turns out, the skincare industry is a $155 billion global industry and 1 in 2 people are not satisfied with their products. Zhao hypothesized that the dissatisfaction was likely due to the fact that products were made as “one size fits all”. When, in fact, “one size fits none.” Zhao’s direct experience revealed that skincare products need to be tailored to the individual in order to be effective.
Zhao called her friend, Dr. Amy Yuan, a computational physicist, to see if there was a way to create and scale a customized skincare line. Over the next few years, the two friends turned co-founders birthed the Skin Genome Project, a database with 25 million consumer testimonials and reviews and over 4,000 scientific papers on more than 100,000 products and 20,000 ingredients. In 2018 the project won the MIT AI Idol award and has been the core engine driving the success of PROVEN Skincare which now serves consumers in the U.S., EU, the U.K., and Canada.
How does PROVEN work?
As a prospective PROVEN skin care customer, you take the brand’s three-minute Skin Genome Quiz. The quiz addresses skin care concerns such as rosacea and acne. It also assesses your skin’s sensitivity level by gathering information about your ethnicity and lifestyle such as exposure to screentime and stress. It also asks for your zip code to determine the UV index in your area and other environmental factors such as pollution.
After taking the 3-minute PROVEN Skin Genome Quiz, they create a custom night cream, daytime SPF moisturizer, and cleanser for your skin. All of these products cost you less than $100 per month.
Is PROVEN Skincare good?
PROVEN is a media darling and their customers love the customized skincare treatment at an affordable price point. The company executives made an appearance on Shark Tank—although no sharks took the bait- and has even been featured on The Today Show. Although they didn’t raise funding on Shark Tank, they passed at a $10M valuation and PROVEN is now raising capital at $290M. YouTubers and influencers consistently share their experience with PROVEN on social media.
In less than two years, PROVEN reached a $24 million revenue run rate and its gross profit in 2020 was $6.4 million.
However, the company has operated at a loss since its launch in Oct. 2019. The net loss for 2019 was $2.1 million, and the net loss for 2020 was $2.9 million. Zhao has not shared the number of PROVEN subscribers or its average customer lifetime value, however, the subscription retention rate according to PROVEN is 70%.
Are skincare stocks a good investment?
The skincare sector has been the golden child of the beauty industry over the past few years while other industries have faltered. For example, the makeup sector took a dive at the onset of the pandemic because who was wearing lipstick while we were all rocking N95s?
Non-beauty industry stocks have also had a rough time. Company layoffs and the threat of a looming recession have negatively impacted tech stocks causing a ripple of panic amongst shareholders.
But, in the midst of all the financial chaos, skincare stocks are glowing. ULTA’s stock, PROVEN’s revenue performance, and others demonstrate that skincare may be recession-proof and inflation resistant.
Opportunity with PROVEN
On August 6, 2021 PROVEN filed an Offering Circular through a Reg A+. This filing is similar to a prospectus for a traditional IPO.
Reg A+ allows a company to raise money through an equity crowdfunding campaign that is registered with the SEC. It is sometimes referred to as a “mini-IPO” because private companies earning less than $1 billion can go public without the traditional IPO red tape and exorbitant fees. Additionally, it offers lower accounting and disclosure standards than conventional offerings.
Ming Zhao decided to pursue this route because, in her words, private equity is where “the richest people [become even] richer”. Zhao also stated, “Why should only venture capitalists [access] the value of PROVEN prior to an IPO?”
“The key reason we wanted to have this crowdfunding campaign is to allow consumers to be owners in PROVEN and join in on the value and continue to create it.” - Ming Zhao
Before 2012, opportunities to build wealth through investing in a startup were limited to accredited investors. An accredited investor is someone with an annual income of $200,000 ($300,000 with a spouse) and/or a net worth of $1 million (excluding their primary residence). In other words, as Zhao stated, the opportunity to become rich was only available to those who were already rich.
In 2012, the Obama administration passed the JOBS Act which opened up investment opportunities to the everyday person. The JOBS Act made it possible for equity crowdfunding campaigns to exist.
Equity crowdfunding allows for more people to have a seat at the table and to become owners in successful startups such as PROVEN Skincare.
Should you invest in PROVEN Skincare?
If you’re wondering, “is PROVEN a good investment?”, at Money & Mimosas we encourage you to ask yourself three questions:
What is the potential growth or upside?
What are the potential roadblocks?
How does this align with my values and/or overall investment strategy?
For starters, review their financials. Then, assess the market potential.
At Money & Mimosas, we are impressed by PROVEN’s revenue growth but, the net loss YoY is not ideal. However, a lack of profitability is standard with AI and technology companies. It can take several years for these companies to become profitable because there are huge up-front costs related to research and development and brand awareness. PROVEN has invested heavily in brand awareness including partnerships with influencers. We’ve come across PROVEN while listening to podcasts and watching YouTube videos. As an investor, seeing your investment “out in the wild” is a good sign.
We are also impressed by the market potential. As you read at the beginning of the article, the skincare industry is a $155 billion dollar global industry. PROVEN has only begun to scratch the surface of its potential.
When it comes to your values, we encourage you to research the team, the company’s overall stance on the environmental + social causes you care about, and conduct your own due diligence on how PROVEN could fit into your own personal investment strategy.
How to invest in PROVEN
PROVEN is currently offering shares at $6.60 (USD). The minimum investment is $990 (150 shares).
Your investment will be used to further AI innovation and talent, expand domestic and global marketing efforts for its existing products, and invest in further research and development of new product lines and categories.
The process of investing is really easy. Head over to PROVEN’s investor page and enter your email information into the invitation box. From there, the website will walk you through the seamless process of becoming an investor with PROVEN.
Disclaimers
PROVEN is offering securities through the use of an Offering Statement that has been qualified by the Securities and Exchange Commission under Tier II of Regulation A. A copy of the Final Offering Circular that forms a part of the Offering Statement may be obtained from: PROVEN
Money & Mimosas May Receive Monetary Compensation By The Issuer, Or Its Agency, For Publicizing The Offering Of The Issuer’s Securities. Money & Mimosas And Issuer Of This Offering Make No Promises, Representations, Warranties Or Guarantees That Any Of The Services Will Result In A Profit Or Will Not Result In A Loss. Any Comments Expressed Herein Are Publisher’s Own And Not Intended As Investment Advice Or A Solicitation.
