Tones of Melanin Apparel
DEAL
EPISODE SUMMARY
🕓 Air Date: May 19, 2023
Asking For:
$300,000 for 5%
Investor:
Mark Cuban
Deal:
$300,000 for 12%
PRODUCT SUMMARY
Tones of Melanin is a fashion brand that combines streetwear and collegiate wear, specifically catering to historically Black colleges and universities (HBCUs), providing unique and stylish clothing options.
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Background Story
Ashley Jones, the founder of Tones of Melanin, hails from Virginia Beach, Virginia, and she created the brand to address the underrepresentation of HBCUs in the fashion industry. Her journey began in high school, where she started designing, which eventually led to a side hustle during her college years, designing for various campus organizations. She recognized a significant gap in the market when she realized that her designs stood out from the limited options available for HBCU apparel.
Coming from a family with a history of entrepreneurship, where her grandparents ran one of the first African-American beauty supply companies in their area, Ashley had early exposure to business ownership. Her determination to support herself and her passion for fashion led her to start her own brand. She initially focused on Greek apparel and later transitioned to HBCU apparel due to a growing need within that community.
The Product
Tones of Melanin offers a range of clothing items, including reversible basketball shorts with pockets, half-zip windbreakers, reversible satin jackets, and various other apparel items, all designed with a combination of streetwear and collegiate aesthetics.
These products are made with high-quality materials and are known for their unique designs and the incorporation of HBCU logos and themes. The company’s products cater to students, faculty, and alumni of HBCUs, offering them an alternative to the traditional, limited options in the market.
Notably, some of the clothing items are reversible, providing customers with multiple looks in a single purchase. Tones of Melanin’s items are priced competitively, with an example being a jacket sold for $110 on their website and $56 to department stores, resulting in a profitable margin.
Customers can purchase these products directly from the Tones of Melanin website, and they are also available in various department stores, such as Dick’s Sporting Goods and Follett, which services 25 HBCU bookstores.
How It Went
The company’s position before Shark Tank
Tones of Melanin has shown significant growth and success in the fashion industry, primarily in the niche market of HBCU apparel. They have secured licenses with over 40 HBCUs, making them a prominent player in this field. The company’s strong partnerships include being available in retailers like Dick’s Sporting Goods, Follett, and Fanatics, which exposes their brand to a wide customer base.
The company’s sales have been impressive, with a reported $3.3 million in total revenue since 2017 and $1.4 million in sales in the last 12 months. This strong financial performance showcases their ability to capture the market and generate substantial revenue. Tones of Melanin has achieved a profit margin of about 25%, and they have recently received a significant purchase order of $973,000 from Follett, demonstrating that their business is flourishing.
The company is still reinvesting a substantial portion of their profits back into the business, focusing on growth and inventory. The funding for the business primarily comes from their manufacturer, which allows for deferred payments, which has enabled Tones of Melanin to scale their operations. This creative approach to financing their inventory has been pivotal in their growth.
Ashley Jones, the founder, is hands-on in managing the company’s day-to-day operations and is actively involved in design, manufacturing, and decision-making. Currently, the company has a five-person team, and they are looking to expand their fulfillment capabilities and invest in marketing.
The Negotiations:
The negotiation process on Shark Tank began with Ashley Jones seeking $300,000 in exchange for a 5% equity stake in Tones of Melanin. While some other Sharks bowed out due to a lack of expertise or potential conflicts of interest, Mark Cuban saw the opportunity in Tones of Melanin’s growth and Ashley’s impressive entrepreneurial journey. He praised Ashley’s determination and confidence and recognized the potential of her brand in the growing HBCU apparel market.
Mark Cuban made the first offer, proposing $300,000 for a 15% equity share, valuing the company at $2 million. Ashley swiftly countered, suggesting a 12% equity stake and Mark Cuban promptly accepted the revised offer. The deal was struck at $300,000 for 12% equity in the business. This successful negotiation gave Tones of Melanin the capital it needed to continue expanding and making a significant impact in the fashion industry for HBCUs.
