Beauty Trends

How to Find Investors for Your Beauty Brand, According to Venture Capitalists

“Beauty is a very crowded category so it’s important for founders to really understand their market and communicate their competitive advantage and differentiation,” notes Strandberg.

According to Dua, it’s important to answer one big question: Why? “[The best pitch] gets to the heart of why this product, why now, and why this team?” she says. “Don’t pitch the conservative model of what you think you can do today — pitch the big vision. We want to know how what you’re bringing to the market is transformational.”

Find Your Way In (Despite COVID-19)

“There’s no more bumping into one another serendipitously — or intentionally — at an industry mixer, so warm introductions and cold emails are ever-important,” says Johnson about the change ushered in by the COVID-19 pandemic. A warm introduction by mutual acquaintances beats a cold email, but the latter still packs value. “I’ve learned to not underestimate the value of a great, cold email that’s brief, well-tailored to its recipient, and doesn’t over-burden them with information or requests.”

Scoring an introduction isn’t as hard as you might think. “Start with founders,” says Duggal. “There are so many great founders out there to connect with, both in terms of learning, but also to connect with VCs that they like and recommend.”

Bennett also suggests casting a wide net: “I recommend that brand founders make an effort to connect with investors, industry leaders, and successful entrepreneurs they admire,” he says. “Reach out through LinkedIn or via email and don’t be afraid to ask someone for an introduction. I’ve found the beauty industry is typically very supportive of young brands, but you have to do the work to make the connections. A strong concept, revenue traction, and a clear plan will do a lot for you, but relationships can open many doors.”

As far as flubs go, taking a meeting before you’re ready ranks high on the list for our experts. “Know your numbers and the difference between ARR [annual recurring revenue], MRR [monthly recurring revenue], and GMV [gross merchandise volume],” Woodward says. “And have a clear idea of the key metrics that you should know: AOV [average order value], LTV [lifetime value], month-over-month growth, profit vs revenue, etc.” Bennett adds: “Be realistic. I find that many young founders don’t truly know or understand how to grow their businesses.”

Consider Other Options

“VC is not the right path for many beauty brands, nor the end-all, be-all,” reminds Johnson. She explains that most early-stage VCs are looking for huge returns, up to 20 times the investment, which means differing goals might cause a bad fit if funding is taken under the wrong circumstances. “It’s hugely important that founders make sure their expectations are well-aligned with any financial backers they partner up with, whether that’s venture capitalists, angels, friends/family, debt providers, or other types.”

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