B Corp Kester Black hits $2.1 million in equity raise
27 October 2021 at 4:09 pm
From almost losing it all to raising over $2 million in less than a year, it’s been a tumultuous time for Anna Ross of Kester Black. Nikki Stefanoff sat down with her for a chat about the rollercoaster ride of the past 18 months.
When Kester Black launched in 2014 it was a side hustle to founder Anna Ross’s “real job” as a jewellery designer.
What started as a business selling nail polish to match the colour of the rings Ross was designing, quickly turned into its own standalone brand. And a successful one at that.
Over the years Ross has expanded the range from just nail polish to include eye pencils, lipsticks and natural non-toxic nail care and has gained a plethora of third-party ethical certifications along the way – Kester Black is a B Corp, vegan and cruelty-free, carbon-neutral and Halal.
Then in 2020, the COVID-19 pandemic shut everything down and Ross anticipated it could mean the end of her small business. She let her entire staff go and, along with her life and business partner Fergus, moved back to her home country of New Zealand.
Then something unexpected happened.
The rise in eCommerce during the world’s extended lockdowns and a desire for at-home nail care saw Kester Black’s sales start to go through the roof. Ross quickly hired the Kester Black team back and, over the course of six months, started making plans to expand.
The recent crowd-funded equity raise through Birchal was the first step in delivering on Ross’s expansion plans.
After a two-week campaign, Ross raised $2.17 million with the first million raised in less than 24 hours and 1,687 inventors signed up for shares in the business.
We caught up with her to talk about running a business during a once in a 100-year pandemic, her move back to NZ and what the plans are for Kester Black now there’s been a $2 million influx of capital.
How did the COVID shutdown affect the business?
It was such a crazy time for us. We had to leave our warehouse in November 2019 right before Black Friday and so had to bring everything in house. In early 2020, my partner and I went to Europe, got caught up in lockdowns, came back to Melbourne, got caught in another lockdown and then the lease on our house ended. We ended up having to move into a hotel for three months before packing everything up and heading back to NZ. I can laugh now but at the time we had to have 100,000 units of packaging arrive at our hotel apartment — it was nuts.
When COVID first hit we let all our staff go because we thought that was the end of the business, however, we ended up hiring them all back when we understood more about government support.
It seems like a lifetime ago now but COVID came off the back of the bushfires, which also really affected our business because we wanted to be sensitive to what was happening and so didn’t market ourselves as strongly — no one needed to hear about beauty products when the bushfires were burning. It was a rough time and we really weren’t doing so well as a business.
What was the approach at that point? How did you ride it out?
Luckily for us, we had spent a lot of time and effort getting the website set up for eCommerce. Thank God we did that because if it hadn’t been for eCommerce the pandemic shutdowns would’ve been a complete disaster for us. The pandemic accelerated the eCommerce side of the business for us. Everything picked up at that point.
Why do you think that was?
I think everybody was sick of being at home. The success of eCommerce caught a lot of businesses by surprise because the general feeling was that we could go into a recession and no one would spend any money and then the opposite happened.
Was that when you started to think about the next steps for Kester Black? Was it then you started to think about doing an equity raise?
Six months ago I had gotten to a point where I thought I couldn’t run the business anymore, I was just exhausted and I started to talk to my lawyer about selling. We had an offer of a million dollars, which my lawyer told me to sleep on. He’s been such a beautiful advisor to my business for the last three years that I took his advice. I then realised that I didn’t want to give up Kester Black and we started to talk about doing a raise.
When did you start the process?
Literally six months ago. The Birchal raise closed on 14 October and it was on 14 April that we decided to go for it.
Was hitting the $2 million equity goal surprising or just plain exciting?
It was exciting. The whole process gave me a real understanding of what the company is worth — we were valued at $22 million — and it’s given me a real burst of energy to take Kester Black to the next stage.
At almost $2.2 million, the raise was a big one. What’s the investment plan for the business?
We’re going to spend it very slowly! The strategy at the moment is to become a fully eCommerce business, which means closing down all external distributors and wholesalers. We’re hiring three new people, two of which will be in marketing which is exciting because we’ve never had a marketing team before. The goal is for us to become a full-range beauty brand and the first step to that is that Kester Black will launch a skincare range.
Does being a sustainable and ethical business remain just as important as you expand?
Absolutely. We recently launched our sustainability strategy, which is open-sourced. I did it because there are lots of sustainability strategies for fashion brands but I couldn’t find any for beauty and I needed something to base my decisions on. We’ve been doing this kind of work since 2014 but we’ve never really formalised it.
Clean, ethical, sustainable beauty is the whole ethos behind Kester Black. When I started out with nail polish I did it because nail polish is, essentially, not a particularly“clean” product and so I thought, well if people won’t stop buying it how could it make a positive impact. That’s where Kester Black started.
We then went through third party accreditation, became a B Corp, and then suddenly we had the most accreditation in the beauty industry. We became accidental leaders in the beauty space, and we want to stay that way. The new sustainability guide for our business is a step-by-step guide to how we plan to do that.
Does being so focused on the sustainability angle make it difficult to create new product lines, if everything has to tick the ethical and sustainable box?
It’s actually easier to do it from the start than it is to retrofit products. We’ve gone as far as we can with “cleaning” up the nail polish but we’re starting to develop skincare and we’ll go on to create a full beauty line. For these product lines, the clean beauty objective is considered right from the very start.
It’s getting the packaging right that takes time. When we launched Kester Black the green packaging revolution hadn’t started but now there are options. The packaging is more complicated than the product formulations!
What’s the timeline looking like for new products?
I think the first skincare products will launch in about 10 months time, and then the rest of the range will be rolled out in 2022. Next year we’ll also be launching brow mascara, more lipsticks and we’re going to do lip treatments and eye treatments. I want Kester Black to be all about the rituals you can do at home – skincare, make-up, nails. Moving forward, for us, it’s all about health and wellbeing. I think the pandemic showed that at-home rituals and self-care can be these little liferafts for us when things are tough.
Find out more about Kester Black, here.