Level 5 Capital Partners Invests $20 Million In Skincare Franchise Heyday

Heyday, a skincare company founded in 2015 with 10 stores in New York, California and Pennsylvania, announced this week it raised $20 million in Series B funding led by private equity firm Level 5 Capital Partners and existing investors Lerer Hippeau and Fifth Wall Ventures. 

Level 5 was founded in 2009 by tech executives to invest in high-end wellness and lifestyle brands. Heyday is the first skincare-exclusive concept in Level 5’s multi-brand portfolio, which includes boutique fitness franchise, Orangetheory Fitness, swim school franchise, Big Blue Swim School* and cryotherapy franchise, Restore Hyper Wellness & Cryotherapy.

Scaling the Company

The funding will go toward Heyday’s physical store expansion through a new franchise system, as well as the digitization of skincare consultations. The brand plans to use the funding to add “hundreds of stores” in the next five years. 

"This strategic funding will enable us to accelerate our growth and deliver on our vision of delivering highly personalized skincare solutions,'' said Adam Ross, CEO & Co-founder of Heyday in a press release. "We are proud of the industry-leading in-store facial experience we have built and excited to expand across the U.S. while innovating digital experiences to meet consumers’ daily skincare needs in a differentiated, expert way.”

Heyday aims to create an inviting and accessible spa experience, with experts trained to give personalized advice to customers while performing treatments. Skincare is the sole focus of Heyday's services, and it looks to appeal to both men and women. Customers can also purchase products in the stores or online.

“Skincare is already a daily routine, yet consumers have little confidence in their skincare routines, what products to use, and how to achieve the results based on their skin type or concerns,'' Heyday president Maureen Sullivan said in the release. “We’re excited to democratize access to expert-led, personalized skincare services both in-shop and online in a way that no one else can. Skincare is an industry that for years has not been putting the customer first, so we’re setting out to change that.”

Strategic Growth Both Virtually and Physically

While physical store expansion through franchising is a big part of the company's plans, some funding will also go toward creating a robust online infrastructure that allows Heyday to put customers in touch with estheticians through virtual experiences on an e-commerce platform. The company also plans to expand its digital services to create more job opportunities for estheticians. These kinds of virtual offerings can provide an important lifeline for service-based beauty concepts like Heyday as the COVID-19 pandemic continues to impact in-store traffic.

Heyday locations were closed until last September due to the pandemic, and currently only its New York and Philadelphia stores are open. Although shops were closed last spring through summer, Heyday’s year-over-year online sales grew by 724%. Heyday upgraded its online shop and made changes to its in-store experience during the pandemic. 

Now, with this round of funding, Heyday hopes to roll out its new virtual consultation platform and jumpstart growth through franchising. 

“By expanding Heyday’s physical footprint to hundreds of stores in the next five years, paired with unique expert-led services available virtually, Heyday is poised to become the most trusted company in skincare,” Chris Kenny, managing partner of Level 5 said in the release. “We are thrilled for Heyday to join our portfolio and for the opportunity to support its franchise expansion.” 

Level 5 will also become one of Heyday’s anchor franchisees with a commitment to invest in 40 units over the next five years.

The Future of the Retail Beauty Industry

Heyday is not the only service-based startup in the retail space to tap into the power of franchising in recent years. Madison Reed, which sells its own hair color products and operates hair color salons, said in 2019 it would open 600 of its Color Bars by 2024 in a joint venture with Franworth. The company also said Color Bars was “the first digitally native vertical brand to use the franchise business model as a growth strategy.” 

By partnering with Level 5, Heyday sees an opportunity to become a leader in the U.S. skincare industry, which generated $17 billion in revenue in 2019, according to market research firm Statista. 

Level 5 does have a solid track record of helping brands achieve their growth goals. The firm acquired a majority stake in Big Blue Swim School in 2017 and committed to infusing $17 million into the brand in 2019. In the three years since Level 5’s involvement, the swim school franchise has gone on to sign agreements for a whopping 122 units across the country.