The next blockbusters for Jessica Alba, Gwyneth Paltrow and Kate Hudson might not be in the movie theater — but in the stock market.
Alba, co-founder of natural-baby products empire Honest Co., is hoping to take her company public at a $1.7 billion valuation, according to a report. A successful IPO could smooth the way for other celebrity-backed brands — even in an ugly market.
Honest Co,. which was started by the “Sin City” star and co-founder Brian Lee in 2012, has been aggressively pursuing funding during the last two years. In August, the company raised $70 million in a funding round that valued it at $1 billion.
And while successful companies have made celebrities out of their founders — Martha Stewart comes to mind — there are few, if any, companies that have been taken public by Hollywood A-listers.
But that could be change. Last year, Paltrow, the “Shakespeare in Love” star and founder of lifestyle brand GOOP, told Fortune magazine that she couldn’t rule out an IPO but said that “seems a little far off.”
Kate Hudson’s athletic wear brand Fabletics could be next. Last year, Adam Goldenberg, the CEO of JustFab, which owns Fabletics, said that they raised $85 million in a 2014 “pre-IPO round.”
Honest Co., which sells diapers and other products through its Web site and retailers such as Target and Costco, has hired Goldman Sachs and Morgan Stanley to work on the deal, according to Bloomberg, which reported the IPO news.
But some market observers remain skeptical about an Honest Co. IPO, given the slumping markets. Last month didn’t see any tech IPOs — the first January that has happened since 2009, during the financial crisis, according to Renaissance Capital.
“Maybe having a Hollywood star attached to your company overcomes all this stuff that no one else can overcome,” said Rett Wallace, chief executive of Triton Research, a New York firm focused on tech IPOs. “But what’s their competitive advantage and defensible position in the baby powder business?”