How We Funded our New Beauty Brand

Kyle here—Olivia’s husband and co-founder / Chief Operating Officer of Annadea. I run the operating side of Annadea, so when Olivia asked me to take this week’s letter, the natural subject was the one she hasn’t written about yet: how we have paid for the company. Short answer: we bootstrapped it. We have funded every part of the business ourselves, without outside investment, and that was a deliberate decision. We could have raised money but we chose not to.

The question we get more often than any other is who is behind the company financially—which fund, which angel, which strategic partner. There isn’t one. It is the two of us, and that single fact has shaped almost every other decision we have made. I wanted to use today’s Extra Scoop post to lay out the reasoning behind it, the tradeoffs it has required, and what I would tell another founder weighing the same choice.

We started with an advantage some first-time founders don’t have: an existing business that already generates cash. Olivia’s creator business produces real revenue, and that revenue gave us the runway to fund Annadea out of our own pocket. We never had to persuade anyone to write a check before we knew whether the product worked. That changed the entire decision. Once you can finance the business yourself, outside money becomes optional, and we treated it as a decision to be justified rather than an assumption to be made.

When we examined it, the issue came down to control. Outside capital comes with conditions. Investors have a legitimate interest in how their money is spent, how quickly the company grows, and when it begins to perform, and that interest becomes influence over the decisions you make. We were not willing to accept that influence before we had proven the product on its own. Surrendering authority over the company in exchange for money we did not strictly need, at the precise moment we had the most unanswered questions, was a poor trade. We wanted to own our decisions outright, including the ones that might not work out. The right time to bring in investors, if we ever do, is after the product has demonstrated demand, when we can negotiate from evidence rather than a hopeful forecast.

Timelines are part of this as well. An investor is deploying a fund with its own horizon and obligations, and that clock does not necessarily match the pace at which a brand should be built responsibly. Capital that needs a particular return by a certain date can push a company toward growth it isn’t ready for, or toward an exit that suits the cap table more than the people who built it. We wanted the company’s pace set by the product and the customer, not by someone else’s reporting cycle.

There is also the matter of personal exposure. Olivia and I are personally responsible for every dollar that has gone into the company. Neither of us takes that lightly. It means we treat the company’s money the way you treat your own (and we have the same expectation of all of our team members), and that shows up in nearly every decision we make.

The capital we have put in has gone strictly where it needed to go in order to build a real product, and most of it will be invisible to our customers. It has gone to custom formula development and several lab rounds with our contract manufacturers, stability and formula testing, a first inventory run, and then already a second. We’re funding influencer and affiliate programs, web development, a handful of outside contractors. Of course we have to pay for day-to-day operations, legal fees, intellectual-property protection, and entity formation. Inventory in particular consumes more cash than anything else, because you pay for it in full long before you sell through it. Formulation, too, is rarely a single attempt; reaching the standard we wanted meant repeating lab rounds and retesting until the result held up, and every iteration carried real cost.

We have kept the team small by design. Every hire is a fixed cost that must be covered in a weak month as well as a strong one, and fixed costs are the fastest way to shorten a runway, so we have added people slowly and only when the work clearly demanded it.

The same logic shaped smaller choices. Custom packaging is one of the first places founders spend money to feel like a serious brand, and we declined. We used stock packaging and put the money into the decoration instead: the printing, the finish, the tactile details that determine whether something reads as premium when a customer picks it up. The component is an off-the-shelf part, but the execution we applied to it is what makes the product feel considered in hand.

Our PR boxes follow the same reasoning. The category has trained everyone to expect an elaborate unboxing, and we ship our product in a plain brown corrugate box. It is less photogenic and considerably cheaper, and at the volume we send, that difference funds the product itself rather than the packaging around it. That is the priority we would rather spend against.

The principle is consistent across all of it: we invest in what the customer sees and touches, and we economize on everything they never will. Our influencer and affiliate programs are built on the same idea, weighted toward performance rather than flat fees, so that the spending tracks results instead of running ahead of them. It is a slower way to build awareness than buying it outright, but every dollar in it is accountable to something.

Funding the company ourselves made us better operators, which I did not anticipate at the start.

When the money is yours, every dollar has to justify itself. You scrutinize spending in a way that well-capitalized companies often do not. A funded team can tell itself it will sort out the economics later, or raise again, or that any single line item is too small to matter. We never had that cushion, and its absence turned out to be an advantage.

It also forced a degree of deliberateness into decisions that many founders make on autopilot: vendor payment terms, influencer rates, the size of a second production run. We negotiate harder than we likely would with someone else’s money because it is ours. The same attention applies to the money coming in as much as the money going out, from payment terms to the structure of every contract we sign. It is demanding work, and it has built a discipline into how we operate that I expect we would keep now regardless of how the company were funded in the future.

It changed how we think about time as much as money. With a small team and no outside cushion, we cannot pursue every opportunity that presents itself, so we have had to get disciplined about what we decline. A funded company can chase several directions at once and absorb the ones that fail. We have to choose, and choosing well, repeatedly, has probably done more for the business than any individual decision about where to spend.

Every founder lives with the tension between profitability and growth, funded or not. What changes when you are self-funded is that the tension resolves toward profitability whether you want it to or not. We cannot pursue growth at any cost, because there is no reserve of outside capital to fund the pursuit. Every marketing dollar has to produce a measurable return; we cannot run negative unit economics for months on the assumption that we will eventually grow into them. The business has to work now, on its current economics, not on a projection that depends on the next round closing.

In practice that means holding every channel to a standard. We look at what it costs to acquire a customer and how long it takes to earn that back, and we move the budget toward what pays and away from what doesn’t. Impressions, follower counts, and gross top-line figures detached from margin do not survive long in a company spending its own money. None of that is glamorous, and it is precisely what keeps us clear about which efforts are contributing and which only appear to be.

The discipline that imposes is, in my view, undervalued. Funding the company ourselves obligated us to build something that stands on its own economics from the beginning. A meaningful number of brands that appear to be winning are well-capitalized experiments operating on borrowed time, and because we never had that capital, we had no choice but to build a business that works without it. It also pushed us to identify our efficient acquisition channels earlier than we otherwise might have, because we could not afford to subsidize the inefficient ones while we waited for the picture to clarify.

The cost of that discipline is real. We will, at times, grow more slowly than a competitor who has raised a large round and decided to buy market share outright. In beauty, attention moves quickly, and capital can buy attention. Watching a funded competitor saturate a channel at a scale we cannot match is genuinely uncomfortable, and it is a real and recurring consideration.

It is tempting to assume the funded version of Annadea would be the same company with more money behind it, simply moving faster, but that is not how outside financing works.

We would have more capital, and we would also be sitting across the table from investors whose role, in that negotiation, is to question every assumption beneath our valuation. Early-stage investors are trying to acquire as much of the company as they can for as little capital as possible; that is how the incentive is structured. The result is that your valuation gets taken apart, and you frequently give up a significant share of what you have built for money that does not go as far as you had hoped. And dilution compounds. The share you give away in a first round is followed by more in the next, and more in the one after that, so the percentage of the company you ultimately retain can shrink considerably across a financing history that felt reasonable at each individual step. Founders consistently underestimate how quickly that accumulates.

Dilutive financing also changes whose timeline you operate on. Once you have taken it, the schedule is partly theirs, and decisions that used to take an afternoon become matters for the quarterly board meeting. What was a quick judgment call becomes a scheduled discussion with people who were not in the room when the problem arose–appropriate governance, and also a genuine change in how quickly a company can move. The speed and autonomy that make early-stage building productive give way to process. Some founders want that structure, and first-time founders in particular can benefit from the oversight. We did not want it at this stage.

In fairness, the right investor adds real value: relationships, credibility, operating experience the founders do not yet have. At the right moment, a strong investor can change a company’s trajectory. But that caliber of investor is uncommon at the earliest stage, and the odds of securing one are low. More often, early financing comes down to selling equity cheaply for capital alone. We decided that if we were going to sell a part of the company, we would do it later, from a position of strength, with a proven product and a real financial record standing behind the number.

For anyone facing the same decision, there are a few things to consider, with the caveat that our circumstances are specific and no one should draw a universal rule on financing from a single company.

Establish your real capital requirements before anything else, using actual numbers rather than an optimistic estimate. I will readily admit that this business required considerably more capital than I expected at the outset, and I came to it with a finance background and a fair amount of confidence. Understand what the company genuinely costs to build before you decide how to fund it.

Then determine, honestly, whether your channel can reach cash-flow positive without outside money. For some businesses it cannot, and raising is the right call. But a well-positioned Amazon or DTC business, with the right product and a genuine distribution advantage, often can get there on its own. The question is whether your contribution margin and your channel can compound without external fuel, and for a sound product with a distribution edge, frequently they can. Do not assume a round is necessary simply because the founders you follow have raised one.

If you already have a revenue stream, use it before you consider diluting. This is the point I would emphasize most. Do not raise because the option is available, and do not raise because a term sheet feels like outside validation. A term sheet is a financing offer, not a judgment on the quality of your idea, and it deserves the same scrutiny as any other financial decision.

Finally, keep the team lean for as long as you can. The moment you take on fixed overhead, your runway contracts faster than your projections suggest. Headcount can feel like progress, but it is fixed cost committed ahead of the revenue meant to cover it, and it shortens your runway accordingly.

The reality of funding your business yourself is that it’s extremely stressful. The amount of times per day I look at a literal daily cashflow should not be overlooked. It’s a constant game of robbing Peter to pay Paul. Going from my left pocket to my right. All while trying to make sure everyone gets paid, and paid on time.

None of this reflects an ideological position. If the right capital became available at the right time, on terms that respected what we have built, I would take the meeting. We did not bootstrap out of principle. We did it because we had the means to fund the company ourselves and concluded that keeping control was worth more to us than the capital we would have traded it for.

What the decision has given us is straightforward. We own the company and we own its decisions, the sound ones and the mistakes alike. And we have been required to build a business that works on its own terms, with no reserve of outside money beneath it. It is a more demanding way to operate. For a company at our stage, I am convinced it is the right one.