How Private Equity Uses Key Executive Hires to Transform the Beauty Industry
Beauty and skincare has long been dominated by a handful of companies like L’Oréal, Estée Lauder, Gillette, Nivea and Guerlain. But as a younger cohort of consumers flock online, venture capital is increasingly seeing gold in a new crop of upstart companies, and they are therefore looking for companies to invest in — and the executive talent needed to scale these fan favorites to new audiences.
The Role of E-Commerce
The top 20 companies still truly control bricks and mortar retail like drugstores and department stores — according to Nielsen, 96% of these channels are “owned” by the conglomerates.
When you look at the e-commerce, however, a surprising picture emerges: 86% of e-commerce channels are controlled by companies outside the top 20. Who are these companies and who is funding them? They range from natural beauty brands to brands catering to men, but those in private equity know there is a lot of potential in this growing sector.
Key Players in Venture-Backed Beauty
The venture-backed beauty, skincare and cosmetics space has room for customer favorites and small, innovative upstarts. Some of the more interesting players include:
- True Botanicals, a clean and sustainable skincare brand favored by celebrities like Olivia Wilde and Laura Linney, has raised a total of $18.6 million in three rounds through funds like Sonoma Brands, Kaktus Capital and Cue Ball.
- ILIA Beauty was founded in Vancouver in 2011 and has raised $14.5 million over 2 rounds via Silas Capital and Sandbridge Capital.
- Drunk Elephant, a cult classic skincare brand that eschews chemical ingredients and has raised $8.3 million dollars
Trends Driving Growth and Investment
There are a number of trends driving investment and interest in the beauty startup space, including:
- Clean Beauty: younger consumers are driving a demand for so-called “clean beauty,” or cosmetic and skincare products with organic and natural ingredients, to the tune of an estimated $22 billion in 2022.
- Products for Men: The men’s personal care industry seems poised for growth, with venture funding pouring into brands like Harry’s, which sends razors and skincare products to consumers through a subscription service, and Hims, a provider of health and wellness products. Many venture funds sees this as a growing and under-exploited industry.
- Diverse founders: Funds like Harlem Capital Partners look to invest early in women and minority founded companies such as Lumin Skin, a brand that is targeted toward men.
- Digitally Native Vertical Brands: these are brands like Glossier, which were born online and control product sales, production and customer experience.
Executive Traits that private equity firms prize
In fast-growth beauty and skincare startups, venture capital funds are looking for executives that possess the following skills:
- At a stable part of their career.
- Obsessed with the customer experience.
- Familiar with social shopping and employing social media influencers.
- Capable of turning a company around or boosting revenue at a company at a key stage of growth.
- Experienced in major beauty and cosmetics companies.
- Open to tying their compensation to the growth they are able to spearhead.
How We Work to Recruit Executives for Private Equity Backed Companies
We at ACCUR Recruiting Services have extensive experience in assisting private equity firms staff their portfolio companies. Over time we have developed an expertise in selecting seasoned executives from Fortune 500 companies who have the mindset and skills to engineer successful outcomes in PE-backed entities in various stages of growth.
Contact us to find out how we can assist you in finding the right executive team for your portfolio company.
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