Richelieu Dennis’ Essence Ventures has taken over the media darling plagued with financial trouble and layoffs
Beautycon, the L.A.-based company known for live events for budding fashionistas and beauty brands, has come to a less-than-beautiful end, with the website offline, co-founder and CEO Moj Mahdara gone, all staffers laid off and its assets sold off to Richelieu Dennis’ Essence Ventures in a foreclosure sale, TheWrap has learned.
According to one insider with knowledge of the company, Beautycon is no longer “an operating vehicle.”
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It’s a shocking demise for the 8-year-old start-up that raised over $11 million from blue-chip media investors including Hearst, A+E Networks and Roc Nation and was once hailed as “the Super Bowl of the beauty industry.” But in recent years, Beautycon has been rocked by financial troubles and mass layoffs predating the coronavirus pandemic that decimated the live-event industry and forced the cancellation of all 2020 in-person gatherings.
The financial crunch escalated earlier this year as Beautycon made plans to file for bankruptcy, according to four individuals with knowledge of the company. But Dennis’ New York-based Essence Ventures, which had more than $5 million in loans to Beautycon, announced Friday that it had acquired all the company’s assets in a foreclosure sale, including the Beautycon name, website and extensive list of customers.
“BeautyCon is an incredible brand founded by Marina Curry, a Black woman and pioneer who brought greater diversity to the beauty and media industries,” Dennis said in a statement to TheWrap. (Curry, who founded Beautycon in 2011, exited in 2014.) “Our goal is to restore this venerable brand to its former glory and beyond. As we continue our mission to bring heightened diversity to the beauty space and transform the face of media ownership, the decision to continue with BeautyCon Media was an easy one.”
Dennis, a Liberian-born entrepreneur, is no stranger to the beauty industry. In 2017, Unilever bought his beauty-products line Sundial Brands — whose products include SheaMoisture, Nubian Heritage and Madam C.J. Walker. The following year, he bought Essence Magazine and the annual Essence Festival event for Black women (which featured prominently in the 2017 hit comedy “Girls Trip” starring Regina Hall, Queen Latifah, Tiffany Haddish, and Jada Pinkett Smith).
Mahdara will not be involved in the company going forward, a spokesperson for Essence Ventures said.
“I will always be incredibly proud of Beautycon’s positive impact on the beauty and wellness industry. We moved the needle on inclusion, diversity, equity, and representation,” Mahdara said in a statement to TheWrap. “As a gender non-conforming person of color, I am especially proud of the work that we did to create spaces for self-discovery, self-acceptance and self-expression.”
It’s an ignominious end for Mahdara, a charismatic and outspoken figure who grew Beautycon from an invite-only YouTube event to a lucrative convention making money from ticket sales as well as sponsorship deals. Mahdara, who became CEO in 2015, quickly scaled up event revenues from $9 million in 2015 to $16 million by mid-2016, according to Forbes.
But in recent years, the company has struggled. As TheWrap exclusively reported last year, Beautycon ran $150,000 overbudget on its 2019 L.A. convention, delayed payment to talent in brand deals and failed to pay multiple vendors. In May 2020, a judge ordered Beautycon to pay nearly $300,000 to audio-visual services company 3G Productions for unpaid work from 2019. (In July of this year, another judge filed an additional $45,000 in judgments against the company on behalf of other vendors owed back payment.)
When Dennis offered Beautycon a loan in 2018, he appeared to be a “savior at first,” according to one adviser to the company, adding that the debt grew to seem more like “handcuffs for Moj” as Mahdara struggled to raise additional capital. Dennis declined several term sheets for additional capital raises and rejected a proposed sale of the company in December 2019, a second insider familiar with the company said.
A spokesperson for Live Nation, another debt holder, offered this statement: “Live Nation wholeheartedly supports the creative vision Moj Mahdara had in founding Beautycon and did not participate in the foreclosure initiated by Beautycon’s largest debt holder. While we are no longer involved in the Beautycon business, we wish Moj success in her future endeavors.”
Foreclosure on a company by a debt holder is rare — and was triggered after top Beautycon executives began informing investors in early 2021 of the possibility of a bankruptcy filing, as required by the company’s bylaws, according to a third insider.
With 2020 events postponed, and later canceled, due to the pandemic, the company was scrambling to survive with no real prospect of revenues to reverse the flow of red ink. According to the Small Business Administration, Beautycon received a $522,800 Paycheck Protection Program loan in April 2020, and another of the same amount in February 2021. The company’s filings claimed that 26 jobs were retained by both loans, but an individual with knowledge of the company said the payroll was down to just Mahdara and CFO Michael Rafter by the end of 2020. Rafter confirmed to TheWrap that he left the company in mid-March 2021; he declined to comment further.
Several insiders questioned Mahdara’s handling of the company’s finances and response to the pandemic crisis. Last year, Mahdara wanted to organize a multimillion-dollar virtual TV extravaganza that never materialized, one insider said, and rejected suggestions for a simpler virtual event that might have brought in badly needed revenues to keep the venture afloat for longer.
Mahdara declined to comment on specifics of their leadership.
While bankruptcy seemed to be the likeliest option, Dennis clearly had other ideas. “At a certain point, everyone felt Rich was waiting out the dissolution of the company to essentially claim the brand,” the first adviser told TheWrap. After BeautyCon began a legal process known as Assignment for the Benefit of Creditors this past May as an alternative to bankruptcy, an affiliate of Dennis’ Essence Ventures acquired all of Beautycon’s assets in a foreclosure sale in May — but elected not to make any attempt to keep Mahdara at the company.
Mahdara’s LinkedIn page now lists them as merely co-founder of Beautycon and as founder and CEO of Elastic Ventures, “a diversified investment (early and late stage), brand & talent advisory.”
“I continue to be passionate about financial literacy and entrepreneurship, specifically in the beauty and wellness space,” Mahdara said in a statement. “I am focused on building new pathways for founders, particularly those who historically have been excluded from investment opportunities.”
Below, watch Moj Mahdara’s appearance at TheWrap’s Power Women Breakfast in New York in 2017.
Film Editor, Twitter: @bverhoev