Mogul Mark Cuban offered a $400K deal to a startup he rejected at — thanks to his 2 daughters and wife
By Mike-Ross
The convergence of Mark Cuban and the makeup industry is not a common occurrence, but that is about to change.
During an episode of the investment show "Shark Tank," the billionaire investor made an unprecedented move by striking a deal with a makeup brand, despite initially rejecting the company's proposal.
After careful consideration, Cuban's decision to invest was driven by extensive deliberation. The cosmetic brand in question is Youthforia, owned by Fiona Co Chan, which boasts a vibrant and colorful collection marketed as "makeup you can sleep in."
The brand is targeted at Gen Z. Mark Cuban was clear about why he opted out of investing in the company, and stated, “When you have something that’s completely differentiated you ride that and you don’t do anything else because that dilutes your efforts.”
“When you have something unique you play that edge. And that kind of made me question how effective your primary product was,” Cuban added.
However, Kevin O’Leary, Mark Cuban’s colleague on Shark Tank, thought otherwise. He offered Co Chan $100,000 for 20% of the company along with a $300,000 loan and a cut of distribution pay.
He praised Co Chan and said, “It’s a bet on the jockey on this deal. You’re really impressive.”
Since the other Sharks had yet to offer their own bids, Co Chan wanted to hear from Mark Cuban and Barbara Corcoran. Co Chan said the company was set to launch more shades of blush, failing to catch the two’s interest.
O’Leary and Co Chan then began negotiating terms. She offered O’Leary 5% equity for $400,000 and a 50-cent royalty for each unit sold by the company up to $500,000. O’Leary countered with an $800,000 offer for 10% equity and a $1 royalty on each unit.
As the two went back and forth, Mark Cuban seemed to change his mind. He started to shift to Youthforia’s side of the negotiations, and said, “She’s got $2.1 million in sales in a year. That’s not nothing.” He stepped in and offered $400,000 for 10% without a royalty.
Mark Cuban wished that he knew more about the makeup industry since there seemed to be a real deal in Youthforia and he wanted to provide the right guidance for the company.
Still, he shared that he was interested in the makeup brand because his daughters and wife would “understand” the product, even if he didn’t.
O’Leary countered with a $400,000 offer for 7.5% and a 75-cent royalty on sales up to $1 million. Ultimately, Mark Cuban got Co Chan to accept his final offer of $400,000 for 8% and no royalties and ended up beating O’Leary.
Mark Cuban’s interest in Youthforia, which aims to combine eco-friendly ingredients with innovative formulations, has merit.
Launched in April 2021, the hybrid makeup and skincare company had $2 million in sales before appearing on Shark Tank.
TikTok contributed much to the company’s viral success, with mentions of its color-changing oil blush that reacts and blends into customers’ skin.
Youthforia has 135,200 followers and over 4 million likes on TikTok, as well as 61,700 followers on Instagram.
Co Chan created Youthforia after realizing that her skin was affected by pollutants from the places she traveled for work in sales at a tech company.
She shared, “When I first started dating my husband, I used to always sleep in my makeup. I’ve had experiences in the past where I’ve gone to the hospital with allergic reactions from sleeping in makeup and that’s when I came up with the idea of making makeup that works like skin care.”
Youthforia offers face wash, blush, gloss, primer and setting spray, which Co Chan said is safe enough to fall asleep in.
One of the brand’s standout products is the BYO blush, a color-changing blush oil that reacts to the skin’s pH to give customers the perfect shade.
Mark Cuban may have also broken one of his own rules in this first-ever investment in the makeup industry.
He likes to invest in companies with products that he or members of the Dallas Mavericks, the National Basketball Association team he owns, are likely to use. It’s a safe bet that Mark Cuban will not use products made by Youthforia.
Co Chan later shared on Instagram that participating in the show provided exposure as she expanded the brand’s presence at retail.
She said, “A big reason why I decided to go on ‘Shark Tank’ is because when we filmed, it was right before we were launching nationwide in Ulta Beauty.”
The investment is expected to boost the next phase of Youthforia’s evolution, including the launch of non-color-changing blush shades.
Watch the video below and see for yourself the moment Mark Cuban came back to the negotiating table:
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