Every VC Rejected This Beauty Founder’s Plan to Buy His Supplier. He Did It Anyway
Magic Molecule was wary of supply chain issues impacting its business, so it took matters into its own hands.
Justin Kerzner. Illustration: Inc.; Photos: Courtesy Magic Molecule
Justin Kerzner and his wife, Chelsea, had a good thing going with Magic Molecule, the beauty they built around hypochlorous acid (HOCl). Founded in 2023, Magic Molecule is named after HOCl, a naturally occurring disinfectant molecule that’s remarkably effective but, as the couple soon found out, is surprisingly difficult to manufacture. Only a handful of US manufacturers make it correctly, and Magic Molecule relied on one: a Minneapolis-area company called Simple Science LLC.
As Magic Molecule scaled to more than 16,500 retail locations, it dawned on Kerzner that the biggest risk to his business wasn’t competition. It was that he didn’t control his own supply. If Simple Science ever fell behind in HOCl production, Magic Molecule could go out of stock, leaving retail shelves empty and forcing customers to explore other brands.
That’s when Kerzner decided to pursue a purchase
That’s when Kerzner decided to pursue a purchase of his supplier. But in order to do that, he needed access to capital. Nearly every investor he approached about the idea turned him down.
“Every VC conversation started out with, ‘Wow, what a great product! We all love it.’ And then by the end of the second conversation, they would say, ‘Wait, you want to do what?’” Kerzner told Inc.
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“[VCs] tend to go by the book, and the book says never do that, because you can just go get redundant supply anywhere. Why would you lock yourself into something that expensive, with a different team, running an entirely different business?”
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The VCs Kerzner initially spoke to argued
The VCs Kerzner initially spoke to argued that vertical integration is capital-intensive and unnecessary when you can simply find another vendor. But Kerzner had spent years studying the delicate chemistry of HOCl and knew that logic didn’t apply to his category.
“I don’t think they fully understood how difficult it is to make this stuff,” he says.
Source: www.inc.com
