The Cost of the Wrong Capital Game: How Ami Colé Won the Market but Lost the Business
Narrative Introduction
When Diarrha N’Diaye launched Ami Colé in 2021, she described it as a love letter to melanin-rich skin. Built for women of color and powered by community, the brand emerged from her years inside the beauty industry, where she saw firsthand how products labeled “universal” routinely excluded women of color in formulation, undertone, and design. Ami Colé set out to correct that imbalance.
What followed was a rapid ascent. The brand sold through its launch forecast almost immediately, won dozens of industry awards, appeared on Oprah’s Favorite Things list, and secured national distribution at Sephora. Yet only a few years later, Ami Colé announced it would shut down. Founder Diarrha N’Diaye-Mbaye shared the news through a deeply personal letter in The Cut, earning widespread praise for her transparency and grace. Yet the question lingered across the industry: how does a brand with traction, visibility, and loved by A-list celebrities close shop over night?
This case examines how a brand can achieve cultural relevance and retail validation, yet still fail structurally when capital strategy, margin dynamics, and operational readiness fall out of alignment. More importantly, it surfaces the lessons every founder should understand before taking their first check, when the type, timing, and expectations attached to capital quietly begin shaping the company’s future long before the consequences are visible.
Executive Summary / TL;DR
Ami Colé achieved strong brand market fit and community loyalty but lacked capital-operations fit for wholesale retail.
Early fundraising prioritized mission alignment over the full operating capital requirements of prestige retail.
Sephora expansion accelerated credibility but compressed margins and increased cash burn.
Forecasting errors and rapid door expansion outpaced team, governance, and working capital.
Lack of a formal board and senior operating leadership amplified investor misalignment.
Closure was a strategic decision rooted in financial realism and emotional sustainability.
The case highlights the need to model margin profiles, not just topline growth, when scaling consumer brands.
Founding & Ideation
The idea for Ami Colé originated in 2014, shaped by Diarrha N’Diaye’s experience as a makeup artist and later refined through roles at L’Oréal and Glossier. These roles gave her exposure to product development, brand storytelling, and high-growth consumer businesses. By the time Ami Colé launched, the founder had a clear thesis: melanin-rich consumers wanted understated, skin-enhancing beauty products delivered with premium aesthetics and cultural respect.
Growth & Early Wins
The brand launched with a small product assortment and immediate traction. Sales exceeded internal projections within days. Media coverage and awards followed quickly, reinforcing the sense that Ami Colé had tapped into an unmet need. These early wins validated the brand vision and created momentum that would later influence fundraising and expansion decisions.
Fundraising & Capital Strategy
Ami Colé raised approximately 1 million dollars at seed and an additional 1.7 million dollars ahead of retail expansion. Investors were largely mission aligned and excited by the brand’s cultural relevance and early traction.
However, the capital strategy was not fully calibrated to the realities of wholesale retail. Prestige beauty requires significant upfront investment in inventory, fixtures, marketing, and field support. While the brand raised enough to enter retail, it did not raise enough to comfortably sustain and optimize a national footprint. There was also no formal board structure to guide capital allocation or reconcile competing investor advice.
Scaling & Sephora Expansion
Sephora represented a pivotal milestone. Ami Colé debuted in hundreds of stores, gaining national visibility and credibility. Yet wholesale fundamentally changed the business model.
Direct-to-consumer margins that previously hovered around 80 to 90 percent compressed significantly in retail. Wholesale pricing, marketing contributions, and merchandising requirements reduced gross margins to the high 50 percent range. As door count increased toward 600 locations, unit volume rose but margin percentage declined, increasing the company’s burn rate.
Forecasting Failures & Overextension
Several structural issues converged during scale:
Door expansion outpaced operational readiness.
Inventory forecasting errors tied up cash or led to missed sales.
Retail payment terms lagged behind supplier obligations, creating liquidity strain.
Team upgrades and audits increased operating costs and shortened runway.
In hindsight, the founder acknowledged that a smaller pilot of approximately 20 stores would have allowed the company to build repeatable velocity and margin discipline before scaling.
Decision to Close: Strategic vs Emotional Tensions
By late 2024, acquisition discussions and rescue scenarios failed to materialize. The founder faced a choice between continued fundraising under pressure or an orderly wind-down. In July 2025, she publicly announced the decision to close the brand, with operations ending in September.
The announcement triggered a surge in sales driven by community support, but the founder recognized it as emotional validation rather than a sustainable turnaround. Closure brought relief alongside grief, marking a transition from survival mode to agency.
Founder Reflections & Internal Lessons
N’Diaye demonstrated strong vision, authenticity, and brand building ability. Her blind spots centered on capital sequencing, governance, and overextension. Emotionally, she evolved from relentless perseverance to boundary setting and transparency, recognizing that leadership includes knowing when to stop.
Investor Retrospective: What Could Have Been Seen
From an investor lens, several risks were visible:
Undercapitalization relative to retail footprint.
Absence of a formal board.
Margin compression as doors scaled.
Reliance on awards and press as proxies for repeatable retail velocity.
Better diligence around SKU-level economics, cash conversion cycles, and door tier performance could have prompted a slower, more sustainable expansion strategy.
Emotional Labor of Leadership & Ego
The founder openly acknowledged the emotional toll of leadership. Ego initially equated expansion with success, while reality demanded restraint. The emotional labor of layoffs, investor conversations, and public closure was significant, underscoring that founder resilience is not infinite and should be treated as a critical asset.
Community, Mentorship, and Support Systems
Ami Colé’s community remained loyal through the end, reinforcing the brand’s cultural impact. Mentorship existed but was informal. The absence of an embedded operator or independent board member limited the effectiveness of external support during moments of strategic tension.
Key Lessons
Margin profile is a first-order strategic constraint. Direct-to-consumer beauty brands often operate at 80 to 90 percent gross margins. Prestige wholesale margins typically compress to 50 to 60 percent, with approximately 70 percent considered a strong industry KPI after marketing, fixtures, and returns. Ami Colé experienced this compression as door count increased.
Retail scale requires an operating system, not just distribution. Shelf space creates obligation. Inventory, field education, and marketing scale faster than teams expect.
Governance must arrive before complexity. Without a board or senior operator, conflicting investor guidance left the founder navigating tradeoffs alone.
Cultural resonance does not guarantee retail velocity. Awards and community love are signals, not systems.
Emotional sustainability matters as much as financial runway. Leadership endurance influences decision quality.
Exhibits
Timeline from ideation in 2014 through closure in 2025.
DTC versus wholesale margin comparison and target KPI ranges.
Founder, investor, and margin profile lessons summary.
Final Reflection
The story of Ami Colé reframes failure as information rather than indictment. It shows that a founder can do many things right and still face structural constraints that vision alone cannot overcome. In today’s startup environment, where growth signals are often louder than fundamentals, this case reminds us to talk about failure honestly. Not as shame, but as strategy, data, and lived experience.
