While corporate venture capital funds are a trend in their own right, Unilever Ventures has been pioneering the concept of venture investing since 2002. The London-based Corporate Ventures arm of British multinational consumer goods company Unilever was created to empower forward-thinking entrepreneurs. big ideas.
For the past 20 years, Unilever Ventures has been a constant presence in the beauty and wellness investment landscape, supporting founders with strategic capital investments in brands, commerce-enabled technology, and B2B/enterprise technology. Unilever Ventures is a quietly noisy company making early-stage investments and amassing a portfolio of the best brands in the beauty and wellness ecosystem.
In 2023, the fund made the BeautyMatter Power Players list for the second time. While other venture arms make small investments to experiment before buying a business outright, Unilever Ventures has created a hard wall between the investment arm and the parent company.
Olivier Garrel, managing partner of Unilever Ventures, heads Unilever’s quietly noisy London-based venture and growth capital division. He shared his thoughts on the beauty and wellness investment landscape.
Looking back at the investment environment in 2023
2023 was an overall difficult year for the beauty and wellness industry. Despite its inherent resilience, the market is oversaturated. The shift away from scalable performance marketing has led to a slowdown in efficient customer acquisition, a greater emphasis on customer retention strategies, and a refocus on brick-and-mortar retail space. Economic uncertainty, inflation and rising interest rates have made consumers more cautious with their spending, increasing demand for affordability in terms of price points, promotions and pack sizes.
Some companies are dealing with the fallout of excess inventory from supply chain disruptions from the previous year, hurting their balance sheets as a result. The financing environment has become extremely difficult, stock investors and bond providers are becoming more cautious, and the hurdles to raising funds are rising amid high interest rates. As we weather this situation, there is clearly a drive to prioritize gross margins, establish a solid path to profitability, and extend the cash runway to weather the storm. As closures and bankruptcies increase, the industry is adapting and evolving in response to these new consumer behaviors and market conditions.
Despite these hurdles, we remain an active investor and have added five new beauty and wellness companies to our portfolio. We’re seeing a strong resurgence in in-store shopping, and many of our brands are seeing strong momentum thanks to the collaborative efforts of blue-chip retailers to promote inclusivity and support for independent brands. I am enjoying it. The beauty market is also undergoing changes, with “clean beauty” becoming the expected standard and beauty products backed by science gaining more attention.
Categories, trends and markets to focus on
As we head into 2024, lessons learned from the past year will have a significant impact on market focus.
The market will continue to adapt to the challenging funding environment by focusing on operational efficiency and strengthening financial health. While globally, the focus on China may slow, the acceleration of India’s beauty and wellness market is presenting new and exciting growth opportunities. Brands are expected to prioritize customer retention strategies and explore in-store opportunities. Continued efforts to push for inclusivity and support for independent brands will continue, but results have been mixed and require careful consideration.
Thanks to AI solutions, even more brands will enhance their consumer experience and content development in 2024. Efficacy and longevity will continue to be important topics.
Investing in Beauty and Wellness in 2024
The beauty and wellness investment environment in 2024 will be characterized by caution and a demand for profitability and a clear path to unique and differentiated products. The industry’s resilience continues to attract investment, but funding criteria have become more stringent.
Investors are looking for companies with stable gross margins, sustainable funding channels, and clear revenue trajectories. A slowdown in indie beauty exits and an increase in closures has left potential investors looking for well-managed inventory, efficient operations, and attractive brand propositions that can withstand the pressures of a crowded market. This suggests a more prudent investment approach.
The shift to brick-and-mortar stores means that companies with a strong offline presence, or those that can create a seamless omnichannel experience, will continue to have an advantage. Additionally, as the global beauty landscape changes, investors are looking to emerging markets like India for long-term growth potential, while balancing traditional powerhouses (the US). will continue to do so. The key is to identify companies that will survive and thrive by adapting to these new consumer and market realities and leveraging new technologies.