There’s a lot of cash to be made in non-toxic make-up.
Beautycounter, the startup identified for its clear formulations, simply hit unicorn standing. The startup acquired an undisclosed funding from The Carlyle Group, elevating its valuation to $1 billion. The funding provides the agency a majority stake in Beautycounter and is designed to gas the corporate’s development, together with an enlargement past North America. Nevertheless it’s additionally a testomony to how mainstream—and profitable—the clear beauty sector has change into.
Gregg Renfrew launched the model in 2013 meaning to “counter” the norms of the beauty business, notably almost about product security. She constructed an in-house R&D crew, difficult them to develop skincare and beauty merchandise freed from greater than 1,800 components which might be both identified to trigger hurt or are questionable.
Earlier than the Carlyle Group’s funding, Beautycounter had final been valued at $400 million in 2018, in response to the Wall Road Journal, with investments from corporations like TPG Development. The Carlyle Group will purchase out these traders’ stake. Beautycounter doesn’t disclose its revenues, however a agency that analyzes direct promoting companies estimates that the corporate generated $341 million in income in 2020.
Whereas there have all the time been beauty firms that used pure or non-toxic components, these manufacturers tended to be area of interest and goal health-conscious shoppers. Beautycounter is amongst a wave of unpolluted beauty manufacturers—together with True Botanicals, Tata Harper, and Versed—which might be attempting to draw mainstream shoppers. Immediately, retailers like Credo and Follain focus particularly on curating these clear manufacturers, and Sephora now has a subsection devoted to wash manufacturers.
With Beautycounter, Renfrew wished to construct a giant, international empire that may rival conglomerates like L’Oreal and Estee Lauder. With the inflow of money from Carlyle Group, Renfrew is one step nearer. “The purpose was all the time to construct a beauty model that transforms the beauty business at giant,” Renfrew says. “There was by no means one particular plan to gas our development, however we imagine that Carlyle is the right companion for the place we’re.”
The Carlyle Group, which manages $246 billion in belongings, is identified for investing in shopper manufacturers together with Supreme and sneaker model Golden Goose, which made large exits after they had been acquired. Beautycounter’s management crew will proceed to run the day-to-day operations on the firm, however they’ll have entry to The Carlyle Group’s retail and digital consultants, which have helped manufacturers develop a international digital presence.
A part of what attracted The Carlyle Group to Beautycounter is the model’s multi-channel method. Like many different fast-growing startups which have hit the market over the previous decade, Beautycounter is a direct-to-consumer model. However not like Everlane, Glossier, and Warby Parker, Beautycounter sells merchandise throughout many various channels. Apart from its web site and shops, it sells merchandise by way of a military of greater than 65,000 consultants. It’s additionally launched short-term partnerships with Sephora and Goal to promote a few merchandise of their shops. This method allowed Beautycounter to achieve a huge viewers shortly. “We see a giant group that is already very engaged with the model,” says Jay Sammons, The Carlyle Group’s head of worldwide shopper, media, and retail. “We can assist develop this viewers with our experience.”
Beautycounter is distinctive amongst beauty manufacturers as a result of it has an advocacy wing that lobbies Congress to higher regulate the beauty business. Whereas the European Union bans or restricts greater than 1,400 chemical substances in private care merchandise, the USA is way more lenient, banning solely 30. In 2019, Beautycounter’s lobbying started to repay when Senators Dianne Feinstein and Susan Collins launched the Personal Care Products Safety Act, which might require the FDA to guage components in beauty merchandise. It has not but been handed.
Renfrew says she picked Carlyle as an investor as a result of the agency was dedicated to persevering with this advocacy work and likewise to formulating high-quality merchandise with out identified toxins. Sammons, for his half, believes that this consideration to product security is a key promoting level. “Security is what makes this model and these merchandise so compelling to shoppers,” he says.
Eight years after Renfrew launched Beautycounter, the business appears radically completely different. Many shoppers now demand clear merchandise, prompting even legacy manufacturers to be extra clear about their components. L’Oreal, for example, launched a platform offering particulars about what’s in its merchandise and now sells some merchandise without dangerous components.
However as “clear beauty” turns into extra widespread, it’s turning into more and more troublesome for shoppers to distinguish between merchandise. This partly comes all the way down to not having standardized definitions about what constitutes “clear,” “non-toxic” or “secure.” Manufacturers are ready to make use of this language with out backing it up with knowledge or proof. If the federal government implements stronger rules, it might create clearer requirements and definitions, however this doesn’t appear possible any time quickly.
It can get more and more troublesome for Beautycounter to face out within the crowded clear beauty house within the years to come back, which is partly why each Renfrew and Sammons imagine it’s necessary to construct a loyal viewers now. “This firm was very methodically constructed to search out shoppers and tackle their wants, wherever they’re,” says Sammons. “We imagine that if we are able to get the model in entrance of recent prospects, they’ll change into loyal.”