Beauty business, Ami Colé, owned by a black entrepreneur, set to shut down operations
In a stark reminder of the hurdles faced by Black-owned businesses in the beauty industry, Ami Colé, an award-winning beauty startup that catered to individuals with darker skin tones, has announced its closure, effective from September 2023.
Founded by Diarrha N'Diaye-Mbaye, Ami Colé launched in 2021 and made its mark, selling through Sephora. The brand received significant backing from G9 Ventures, Greycroft, and angel investors like Hannah Bronfman and Lindsay Peoples Wagner, raising over $3 million in venture capital, according to PitchBook. Despite this, the company could not escape the financial and market challenges that plague many startups in the industry.
One of the key factors behind Ami Colé's closure was the difficulty in competing with large corporate brands. N'Diaye-Mbaye stated that the company could not compete with the "deep pockets" of bigger brands, particularly regarding the costs of securing prime retail shelf space at Sephora.
Inconsistent sales and inventory management issues also played a significant role. The company experienced volatile demand, selling out completely some weeks due to influencer mentions, and struggling with unsold inventory at other times, complicating production and scaling decisions.
Additionally, N'Diaye-Mbaye alluded to challenges aligning with investors' expectations, particularly pressure to scale quickly and "appraising investors" whose enthusiasm for inclusivity seemed to wane over time. This misalignment made sustaining operations difficult in a volatile market.
The market conditions and sustainability concerns were also a factor. Amid an uneven post-pandemic and post-DEI (Diversity, Equity, Inclusion) investment climate, continuing in the current market was deemed unsustainable, reflecting broader challenges faced by VC-backed startups in consumer retail.
The closure of Ami Colé underscores the complex financial, market, and investor-related hurdles that Black beauty startups face. These include competing with entrenched brands’ resources, volatile consumer demand, and a venture capital environment that often fails to provide sustained support beyond initial enthusiasm.
Many Black-founded startups have benefited from a surge of investor interest following social justice movements like Black Lives Matter, but this excitement can be fleeting, leading to unstable funding. Competing for shelf space and marketing attention against well-funded mainstream brands requires significant capital, which Black entrepreneurs often lack, impeding sustainable growth.
Investor skepticism and shifting commitments also pose a challenge. Despite public declarations of supporting diversity, Black founders report difficulties because investors may reduce their commitment or demand rapid scale without considering market realities. The broader funding ecosystem for Black entrepreneurs remains broken, with disparities in venture capital access and less tolerance for gradual or less conventional growth paths.
The political backlash against DEI initiatives has made securing long-term investment in Black-owned businesses increasingly challenging. However, the impact of Ami Colé on underrepresented consumers in the beauty industry is obvious. The brand became a celeb favorite among the likes of singer Kelly Rowland and actress Mindy Kaling.
Despite the closure, Diarrha N'Diaye Mbaye remains optimistic about the future. The challenges faced by Ami Colé serve as a call to action for the industry to address the systemic issues that hinder the success of Black-owned businesses in the beauty industry.
- In a challenging landscape for Black-owned businesses in the beauty industry, Ami Colé, a startup that catered to individuals with darker skin tones, has announced its closure in September 2023.
- Founded by Diarrha N'Diaye-Mbaye, Ami Colé received significant backing from venture capital firms, including G9 Ventures, Greycroft, and angel investors such as Hannah Bronfman and Lindsay Peoples Wagner.
- Despite raising over $3 million in venture capital, Ami Colé struggled to compete with large corporate brands and faced financial and market challenges common in the industry.
- Inconsistent sales and inventory management issues further complicated Ami Colé's operations and decision-making, as the company experienced both extreme demand and unsold inventory.
- The founder, Diarrha N'Diaye-Mbaye, also noted challenges in aligning with investors' expectations and the pressure to scale quickly.
- The market conditions and sustainability concerns were also a factor, as the post-pandemic and post-DEI investment climate proved volatile for VC-backed startups in consumer retail.
- The closure of Ami Colé highlights the challenges Black beauty startups face, including competing with entrenched brands' resources, volatile consumer demand, and a venture capital environment that often fails to provide sustained support.
- The political backlash against DEI initiatives and the broken funding ecosystem for Black entrepreneurs make securing long-term investment in Black-owned businesses increasingly difficult, despite the impact these businesses can have on underrepresented consumers in the beauty industry.
