If a casual fashion observer were to read today’s WWD headline that “Drunk Elephant Gets Investment From VMG Partners, Man Repeller’s Leandra Medine,” they’d likely skim over the VMG Partners detail but grow curious by the presence of Medine. In fact, if she hadn’t invested in the skincare line at all, would the article get as many clicks?
We can only assume, but based on Medine’s star power with fashion fans and young women alike, her investment in any company is likely to turn a few more heads than that of VMG, a San Francisco-based private equity firm.
This is an obvious boon for the brands she invests in, says Kellan Terry, a senior PR analyst at Brandwatch. “With her and her money, comes her brand,” he said, and that brand, Man Repeller, is known for being smart, witty and stylish — all qualities that can then be conferred on her investments, which include womenswear line AYR and the lingerie brand Lively. (Medine did not respond for comment when asked about her role as investor or whether there are other companies in her portfolio.)
What’s more, she can lend her wide social reach to these brands. To wit, the Man Repeller Instagram page has over 1.7 million followers, and Medine’s personal account has 416,000. “If she’s willing to get involved on social and promote the companies that she’s chosen to put her money in, it could pay off dividends, especially if it’s not in a contrived way that seems forced,” said Terry. “If it’s something that she’s actually passionate about, and if she’s really a fan of the product — which, I’m assuming that she is, given that she’s investing her money in it — that could absolutely lend itself to moving product for the brand.”
That brand power is nothing to sniff at. Data from Brandwatch shows that Man Repeller was mentioned 4,800 times in the last two weeks, while Drunk Elephant was mentioned only 560 times in the same timeframe.
An image from a Man Repeller post on the Drunk Elephant brand
Drunk Elephant, for its part, insists that capitalizing off Medine’s star power is not the goal, with founder Tiffany Masterson telling WWD, “It’s not about her sitting around and promoting Drunk Elephant all day. She truly used the line.” Medine did write about the product line on Man Repeller in March of last year, and she showcased one of its serums as recently as January.
If that’s true, and we see no uptick in product promotion, the investment route could prove to offer something subtler but more lucrative for both parties. “Taking investment from an influencer [like Medine] can be a smart alternative to the typical pay-to-play model of influencer marketing,”said Jason Goldberg, svp of commerce at digital marketing agency Razorfish. “Rather than a top-line marketing expense to purchase an influencer endorsement, the brand gets an infusion of capital, and the influencer earns capital gains (at a much lower tax rate) rather than income, with the potential for a much higher valuation.” On top of this, he said, investments can seem more authentic than the usual paid endorsement.
When asked about Medine’s investment in her company, Lively founder Michelle Cordeiro Grant argued that it has helped keep her brand authentic. “Having investors like Leandra has allowed us to stay true to our roots as we grow our business at a rapid pace. She really got behind our mission and believes strongly in our ethos,” she said. “She’s been a dream to add to the team for everything she stands for, as an advocate for women and a general purveyor of ‘realness,’ which we love.”
Investments like these can help build positively on Medine’s reputation, as well. “If everything pans out [well], it just adds another bullet point to her resume — that she’s a very savvy investor, and someone who you would want to have on your team if you’re starting to launch a fashion or beauty product,” said Kerry.
Of course, investments don’t always go as planned. “There is a risk the equity won’t be worth anything, and investment ties the influencer to the brand much more closely than a traditional endorsement contract,” said Goldberg.
“When Kim Kardashian takes a fee to endorse Eos Lip Balm and the brand runs into reputation problems, she can simply move on to the next product — but if you’ve made investment it can be much harder to disentangle yourself from the tarnished brand.”