The birth of her first kid in 2008 gave Jessica the idea for The Honest Company. Her mother had then innocently suggested a washing detergent she thought was baby-friendly. According to the narrative, the detergent caused Jessica to get a rash (I’m not clear how this affected the baby).
They concluded 2013 with $50 million in revenue and another $25 million in venture capital.
The business raised $100 million at a $1.7 billion valuation exactly one year later.
Some Honest Mistakes
Around this time, a class-action complaint was filed against the company by consumers who alleged that over 20 of its goods had misleading labels in order to “exploit consumers’ interest in natural or higher-quality products.” According to one of the claimants, labels for products that stated they were “natural” may have actually contained “a magnificent assortment of synthetic and harmful substances.” To resolve and resolve the lawsuit-related difficulties, the corporation ultimately paid millions.
According to reports, the controversies scared off a number of prospective buyers who thought the company’s asking price of $2+ billion was too high. Unilever reportedly had interest at one point, but ultimately decided to pay $600 million to acquire Seventh Generation, a competitor of Honest Company. The takeaway from this is that being the least expensive option in a given category might occasionally pay off.
A “down-round” occurs when a company raises capital at a valuation that is lower than its prior valuation. The Honest Company did this in October 2017 and raised $75 million. In this case, the company was raising money at a valuation of $1 billion, $700 million less than its previous round.
Early investors continuously yearned for the company to go public or be acquired so they could start making money. Unfortunately, the IPO market for a six-year-old consumer packaged goods company with some very recent, very damaging black eyes, proved to be cold.
Some pessimists wrote off The Honest Company. I can vouch for the fact that the majority of folks in Los Angeles’ internet/media sector are familiar with at least one individual who worked intermittently for The Honest Company. Just based on my own experience, I’ve never heard someone praise working at The Honest Co.
The Honest Company went public today, as we already stated. And so far, it was a very successful debut. Bankers for the company had projected a $16 IPO price. In reality, it began at $21 and closed at $23.
The corporation has a public market worth of $2.7 billion at $23 per share.
How Did Jessica Alba Make Out?
According to recently made public SEC filings, Jessica is the owner of 5.65 million shares in The Honest Co. (which includes options that have not yet been officially earned, but very likely will be).
Just 4.8 percent of the company’s total outstanding shares are held by Jessica, who owns 5.65 million of them. The majority of people thought there was a 20 percent stake at the end of 2015. Those downward rounds hurt so much!
Additionally, according to SEC filings, Jessica will get a one-time $2.6 million dividend for successfully leading the business to an IPO. She will also receive a base income of $700,000 for continuing to work for the business. The firm said the following in its IPO prospectus:
Good luck with your IPO, Jessica and The Honest Company!
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