Design Brand Studio McGee Inks Deal With Strand Equity
March 16 2021 - 7:59AM
Dow Jones News
By Laura Kreutzer
Consumer-focused investor Strand Equity Partners is betting on
the democratization of décor with its latest deal.
The Los Angeles-based firm, which has backed brands that include
Oatly Milk and Sweaty Betty activewear, said it is making a growth
investment in Studio McGee, an interior-design firm and lifestyle
brand launched by husband-and-wife team Syd and Shea McGee.
Studio McGee and its affiliated entities offer interior-design
services, a home décor e-commerce site and a Netflix show that
features the co-founders, among other content. The fast-growing
company also has a licensing agreement with Target Corp. to sell
products in the retailer's stores.
The McGees launched the company in 2014 after Shea had built a
large social media following that traced back to posts she put on
Instagram while designing and renovating the couple's first home.
The company quickly grew, and within three years was generating
some $30 million in annual sales, according to a memoir the couple
wrote, "Make It Beautiful, " published earlier this year.
"Most businesses start out by trying to sell a product first,"
said Kevin Chen, a principal at Strand Equity who will take a seat
on Studio McGee's board. "What they did was create a bunch of fans.
Shea started this by creating a bunch of designs without trying to
sell anything, and that created trust that she was there for the
right reasons."
Although the couple funded the company's growth largely on their
own, they decided to take on outside capital as sales skyrocketed,
especially following the couple's launch of a home design series on
Netflix called "Dream Home Makeover," according to Ms. McGee.
"We realized we have an international following we didn't have
six or eight months ago" said Ms. McGee. "We wanted to expand with
the attention on us, but we wanted it to happen quickly. We could
do it in a slower-paced fashion but it would be a more tempered
growth."
The company also saw growth bolstered during coronavirus
pandemic lockdowns, as consumers focused more on their living
spaces, according to Ms. McGee.
The company had been approached by some 15 to 20 investment
firms over the past 18 months, according to Mr. McGee, who said
that the quality of brands in Strand's portfolio, along with the
firm's expertise, won the pair over.
Ms. McGee added that she felt that many of the brands in
Strand's portfolio have grown successfully without compromising
their brand identity.
"You can tell that they are staying true to who they are," she
said. "One of our biggest fears...is that with rapid growth we
would be pushed into doing things that weren't a natural fit for us
or for our customers, " she said.
For its part, Strand, which was started by
entrepreneurs-turned-investors Seth Rodsky and Ted Schwartz, sees
opportunities to expand the brand through licensing, product growth
and additional content development as well as by pushing into new
geographies, according to Mr. Chen.
Strand invests its own partners' money and is able to hold its
investments longer than many firms that manage traditional
co-mingled funds, Mr. Chen added.
"I think the millennial generation is still looking for that
lifestyle voice or figure, much like Martha Stewart was able to be
for her generation," he said. "Shea has a good opportunity to be
that."
Write to Laura Kreutzer at laura.kreutzer@wsj.com
(END) Dow Jones Newswires
March 16, 2021 07:44 ET (11:44 GMT)
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