Investors Are Looking For Brands With Clean Ingredients and Loyal Followings
Source:Retail Dive
From:Taiwan Trade Center, Chicago
Update Time:2021/05/22
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With customers staying at home in 2020 trends in the beauty space changed with some slowing down and others burning brightly. Self-care became a major consumer priority and investors are noticing. According to an April report by CB Insights, funding to the beauty and personal care industry hit an all-time high in 2020, with over US$2 billion of investment, and 2021 is seeing the same trend. By early April 2021, funding had already exceeded US$1.1 billion, up from US$238 million invested in the 1st quarter of last year. Interest in the sector has risen for years as investors like Unilever and Lerer Hippeau pushed capital into startups in personal care. In 2020, there were 236 deals in the category, compared to 278 in 2019, but 2021 is forecast to be even higher, with an anticipated 292 deals. While the investment market for beauty and personal care is hot, skincare and clean beauty have gotten an extra boost, as have direct-to-consumer brands. Investors are looking for companies that not only play to those key categories but have also built loyal followings to spur demand for their products.
While it might not be fair to qualify it as luck, part of the success of clean or natural beauty brands, and brands that cater to skincare and preventative care, is that trends are shifting in their favor. Aside from other (30%) — which includes personal care and fragrance, along with some additional categories — skincare companies have taken the highest percentage of deals from top investors (20%) over the 2015 to 2021 period, according to CB Insights. Makeup came just after, at 14%. Unilever has invested in six companies in the past year, including three that make skincare products, according to CB Insights.
As investors search for the next big brand in beauty, three categories are top of mind, according to CB Insights: clean formulations, brands that tackle skin health conditions, and DTC companies like Glossier that have strong communities and loyal followings.
Source: https://www.retaildive.com/news/how-schmidts-naturals-and-supergoop-think-about-scale/599072/