The intimate apparel industry got a boost this week when Rihanna and Kim Kardashian announced major rounds of funding for their respective fashion ventures.
Rihanna’s underwear brand, Savage X Fenty, secured $125 million in Series C. The day after, Bloomberg reported that Kardashian’s shapewear line, Skims, had doubled its valuation to $3.2 billion after it raised $240 million in new capital.
both Forbes billionaires thanks to their businesses, Rihanna and Kardashian are quick to promote the company’s growth on social media and elsewhere, but, like many celebrity entrepreneurs, they are very guarded when it comes to revealing important financial information.
In general, famous entrepreneurs tend to refuse to reveal how much they have personally invested, and almost all are tight-lipped about sales figures.
“All these private companies are in a PR problem, and it’s even easier when a big name is involved,” says Sucharita Kodali, retail analyst at Forrester. She adds that when it comes to valuations, most startups lie, usually by a factor of 2x to 10x. “Who knows,” she adds, “because no one has seen the term sheets.”
However, celebrities continue to use their fame as both a sword and a shield to gain recognition for startups.
Early examples include Gwyneth Paltrow, who launched her lifestyle brand, Goop, in 2008. By the time she raised $50 million in Series C funding a decade later, various sources estimated Goop’s revenue at 15 to 20 million dollars, but the company declined to confirm the number.
These days, Goop relies on selling provocative items — like its Jade Egg (which claims to increase sexual energy when inserted into the vagina) and the “Keep Your Hands Off My Vagina” candle — more than its acting career. create noise. But when it comes to reporting annual sales figures, the company is much more reserved than its product line.
Country singer Blake Shelton, who ranks 70th on the Forbes 100 celebrity list, earns most of his income as a coach on NBC Noise. Last year Rolling Stone reported that he quietly sold his music catalog for $50 million. But when asked about the deal recently, the famous Shelton was coy. He is now looking for a new revenue stream, his line of hard seltzers, but has yet to reveal how much he has invested in launching Smithworks.
And shortly after leaving their royal duties in the United Kingdom, Prince Harry and Meghan Markle went on an all-American publicity spree, announcing content partnerships with Netflix and Spotify. They also signed with the Harry Walker Agency to cash in on potential speaking engagements. But when it came to revealing the value of those deals, the former royal couple remained as secretive as the firm they left.
Some just lie.
Kardashian’s half-sister, Kylie Jenner, is a great example. The reality star and founder of Kylie Cosmetics boasted an income of $360 million in 2019, making her the youngest billionaire at the time. A year later, publicly traded Coty bought 51% of the business at a $1.2 billion valuation. Soon after, Coty’s filings revealed that Kylie Cosmetics was half the size Jenner had told her. Forbesknocking him off the list of Billionaires.
So why lie or withhold information? “The SEC does not regulate what private companies say and there is no governing body,” says Kodali. “The venture capital community plays a huge role in spreading these lies and no one questions them.”
Kodali, who specializes in e-commerce and consumer behavior, says that until a celebrity-led company goes public, there’s no real way to quantify whether the brand has solid foundations. “Jessica Alba’s early days at The Honest Co. seemed respectable,” but she had to go public to confirm that her books were truly honest, Kodali says.
More recently, Kodali points to Roger Federer’s $50 million investment in sneaker company On Running as an example of a celebrity-backed venture with solid footing. The company, founded in 2010, went public in September 2021 at a valuation of $11.3 billion. “Its growth doesn’t seem to be based on advertising,” says Kodali. “I didn’t hear about it from a headline, I heard about it from driving enthusiasts, then investors. It was barely mentioned in the media until it became public.”
Meanwhile, it remains to be seen how much Savage X Fenty or Skims will do in the traditional intimate apparel market in the long run. Simeon Siegel, a retail analyst at BMO Capital Markets, acknowledges that many brands are trying to capitalize on Victoria’s Secret’s perceived weakness in market share. But an lingerie company like Rihanna’s — even with its $310 million in funding to date — still “isn’t in the same ballpark as Victoria’s Secret,” which reported revenue of more than 5 billion dollars in 2021.
However, with Rihanna and Kardashian’s massive social media followings — nearly 300 million each — both women have already used their fame as an express elevator to riches.
“I put it all in the bucket of startups that overvalue their business and it happens in waves as the sector immediately heats up,” says Kodali. “But you can’t hide once you’re public.”