AMDP Investment Proposal Memo Draft

MEMO


Date: October 18, 2024

To: Clark Hansen, CEO, AMDP

From: Momo Messerschmidt, Director of R&D, AMDP

Re: Glow Recipe Investment Opportunity

__________________________________________________________________________


INTRODUCTION


After careful consideration, the research and development team and I have decided to propose Glow Recipe as a top candidate for our organization’s investment. Glow Recipe is more than just a profitable company—it is setting new standards for social responsibility and environmental consciousness in the global beauty industry, all of which align with AMDP's core values. Glow Recipe creates clean, fruit-forward, clinically-effective skincare designed for radiant, healthy skin. Inspired by Korean skincare philosophies, its innovative formulas combine antioxidant-rich fruits with gentle yet powerful actives, delivering real results. As a 100% vegan and cruelty-free brand, Glow Recipe exemplifies the future of ethical skincare.


In this memo, you will find the following:


  • AMDP’s Key Investment Standards

  • Company Overview

  • Critical Appraisal

  • Final Recommendation


AMDP’S KEY INVESTMENT STANDARDS


Before presenting our team’s investment proposal, I want to reiterate AMDP’s three key investment standards. Glow Recipe not only meets but exceeds expectations in each of these areas, all of which are upheld by our esteemed organization.


  • Triple Bottom Line: The triple bottom line is a business concept that emphasizes the need for companies to assess their social and environmental impacts alongside their financial performance, rather than concentrating solely on profit generation, or the traditional "bottom line" (Miller).

  1. People: Companies will be evaluated based on their commitment to social responsibility which includes how they treat their employees, customers, and community.

  2. Planet: Companies will be evaluated on how effectively they uphold sustainable business practices that minimize disruption to the environment and natural ecosystems.

  3. Profit: Companies must demonstrate substantial fiscal growth and strength while protecting the planet and uplifting society.

  • Corporate Social Responsibility: Corporate social responsibility, also known as CSR, is a self-regulating business model where companies are accountable for their impact on society, operating in ways that benefit the economy, environment, and community (Fernando).

  • Social Enterprise: A social enterprise is a business that prioritizes social objectives while operating within a commercial framework, aiming to generate profits alongside achieving social, cultural, economic, or environmental outcomes (Corporate Finance Institute). 

  • Carbon Footprint: A carbon footprint is the total greenhouse gas emissions, both direct and indirect, caused by an individual, organization, event, or product, calculated by summing emissions from every stage of a product’s lifecycle. These emissions, such as carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O), are expressed in terms of carbon dioxide equivalents (CO₂e), accounting for differences in their heat-trapping abilities through their global warming potential (Center for Sustainable Systems).


COMPANY OVERVIEW: GLOW RECIPE


Company Background & Ethical Commitment


Beauty industry veterans Sarah Lee and Christine Chang joined together in 2014 to launch Glow Recipe, a skincare brand focused on clean, fruit-based, and clinically effective formulations. Drawing inspiration from Korean beauty, Glow Recipe aims to empower consumers through innovative skincare products and education, promoting skin acceptance and sustainability.


Since its inception, Glow Recipe has strongly upheld its "Glowing for the Planet" Initiative in which the company is committed to respecting consumers' skin and the planet (Glow Recipe). Glow Recipe's Glowing for the Planet homepage outlines key aspects of this earnest initiative including the following:


  • Carbon Neutral Certification: Glow Recipe partnered with the non-profit Change Climate to measure, offset, and reduce its carbon footprint through a certification program. Glow Recipe compensates for emissions by purchasing carbon credits and implementing annual reduction plans, including packaging redesign, reduced air freight, and increased use of PCR materials. According to a report from Change Climate, “Glow Recipe addressed last year’s emissions by buying and retiring an equal amount of high quality, verified carbon and clean energy credits” valued at $174,130 (Change Climate).

  • Eco-Conscious Packaging: Glow Recipe reduces waste by designing recyclable packaging, using post-consumer recycled materials, eliminating single-use items, and opting for FSC-certified paper printed with eco-friendly inks to minimize excess packaging (Glow Recipe).

  • Intentional Formulations and Eco-Conscious Sorting: Glow Recipe uses sustainable, traceable methods like cold-pressing and biotechnology while minimizing waste and sourcing ingredients ethically to protect biodiversity and avoid deforestation. (Glow Recipe). All products are 100% vegan, cruelty-free, and Leaping Bunny Certified (Leaping Bunny).

  • Recycling Partnership with Pact Collective: Glow Recipe is officially partnered with Pact Collective to ensure the proper recycling of beauty products. Consumers can either request a shipping label for their empties or drop them off at their local Sephora retailer to recycle with Pact Collective.

  • Glow for Good Initiative: Glow Recipe is actively investing in environmental charities near and dear to the hearts of its consumers.


Financial Performance & Substantial Growth


Glow Recipe is rapidly growing as an international skincare sensation. According to a recent report from Fortune, Glow Recipe “crossed $300 million in revenue last year helped by a few hero products, including its watermelon dew drops, which together with toners accounted for 41% of its business” (Hinchliffe and Abrams). Additionally, Glow Recipe’s viral serums accounted for 35% of the brand’s revenue in 2023. 


Glow Recipe’s success can be attributed to its innovative digital marketing strategy, engaged online community, and the financial support of its investors. Glow Recipe’s latest funding round occurred in October of 2021 for an undisclosed amount from leading small-cap consumer private equity firm North Castle Partners. According to an official press release from NCP, the investment was an instrumental contribution towards Glow Recipe’s “product innovation,

[attraction of] world-class talent, international expansion, and doubling down on [its] community-driven approach to brand building” (North Castle Partners). 


CRITICAL APPRAISAL


Beyond receiving critical recognition from Change Climate and Leaping Bunny, Glow Recipe is frequently praised in leading publications like Forbes, WWD, and Vogue (North Castle Partners). Founders Sarah Lee and Christine Chang have been outspoken in the press about bridging the cultures of Korea and the U.S. with the brand’s ethical skincare line. Fortune recently celebrated Glow Recipe’s popularity among Gen Z and Gen Alpha, which can be credited to its gentle formulas, accessible packaging, and fun yet educational branding (Hinchliffe and Abrams). While Glow Recipe’s success has been fueled by younger consumers, Lee and Chang are committed to maintaining their marketing focus on older Gen Z and Millennials while upholding the brand’s environmental commitments.


FINAL RECOMMENDATION


I strongly believe that AMDP should invest in Glow Recipe given the company’s amazing financial success and commitment to environmental and social good. We can infer from Glow Recipe’s past fiscal success that our investment would propel further profitability. A substantial investment from AMDP could be beneficial for Glow Recipe, enabling the brand to onboard new executive leaders in product development and marketing—areas in which it is setting new standards in the beauty industry. I find Glow Recipe’s commitment to carbon neutrality alongside Change Climate to be highly demonstrative of the brand’s alignment with AMDP’s key standards. Considering all of the above, I believe that an investment in Glow Recipe would involve minimal risk with a great return while sustaining AMDP’s mission values. 



RESOURCES


Center for Sustainable Systems, University of Michigan. 2024. "Carbon Footprint Factsheet." 

Pub. No. CSS09-05.

Fernando, Jason. “What Is CSR? Corporate Social Responsibility Explained.” Investopedia, 

Investopedia, 6 March 2024, 

www.investopedia.com/terms/c/corp-social-responsibility.asp. Accessed 15 October 

2024. 

“Glowing for the Planet.” Glow Recipe, www.glowrecipe.com/pages/glowing-for-the-planet.  

Accessed 18 October 2024. 

“Glow Recipe.” Change Climate, Climate Neutral, 

explore.changeclimate.org/brand/glow-recipe. Accessed 18 October 2024. 

“Glow Recipe.” Leaping Bunny, www.leapingbunny.org/brand/glow-recipe. Accessed 18 

October 2024. 

Hinchliffe, Emma, and Joey Abrams. “How Glow Recipe Became a $300 Million Business.” 

Fortune, Fortune, 13 Feb. 2024, 

fortune.com/2024/02/13/loreal-alums-skincare-brand-glow-recipe/. 18 October 2024. 

Miller, Kelsey. “The Triple Bottom Line: What It Is & Why It’s Important.” Business Insights 

Blog, President & Fellows of Harvard College, 8 December 2020, 

online.hbs.edu/blog/post/what-is-the-triple-bottom-line. Accessed 15 October 2024. 

“North Castle Partners Invests in Clean Skincare Brand, Glow Recipe, to Support Accelerated 

Growth.” North Castle Partners, 1 October 2021. https://northcastlepartners.com/wp-content/uploads/2021/10/NCP_GlowRecipe_PressRelease.pdf. Press release. 

“Social Enterprise.” Corporate Finance Institute, CFI Education Inc., 

corporatefinanceinstitute.com/resources/esg/social-enterprise/. Accessed 15 October 

2024.


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