Beauty industry

Beauty Industry Startups Are Getting Started to Change Venture Investors’ “Heads” | Oak Park Financial

What can I do to get an advance for salons and professionals?

You want to ensure your clients look great However, what happens do you do if your credit isn’t as perfect? Traditional lenders usually require extensive credit and financial documents, and their approval processes can belong. If you’re approved, it could take several days to obtain the loan for the business you need but your chance could be gone in the next few days.

When traditional lenders aren’t available then you have the option of Oak Park Financial for the small-business loan you require to finance your salon. Our short-term business loans for small businesses can be obtained through a speedy simple application that’s completely automated. Give us some basic details and we’ll analyze your business’s performance and give you the money you need for up to $150,000.

What is the best way to use a loan for salons or professionals?

The needs for equipment for spa professionals and hairstylists are innumerable. The amount of working capital you have access to is dependent on the time of year and you must ensure that your staff is trained and have an inventory up to date to keep up to date with the current fashions. A salon loan and professional can help pay for:

  • Rent
  • Equipment
  • Training and staff for hiring and recruitment
  • Beauty inventory
  • Marketing materials

More time spent at home have meant more room for self in the last year and a half, and venture capitalists are taking notice of customers’ increased interest in health and beauty.

Venture-backed businesses within the cosmetics and beauty business, including marketplaces and brands, have raised $1.9billion of capital so far through more than 150deals, as Crunchbase data show. This is in line with the $2.1billion in VC financing for cosmetics and beauty firms over the course of 2020, with over 250 rounds. In 2016, VCbacked cosmetic and beauty startups had a total of $780 million in 278 games of money.

There are many reasons for the rise in interest from investors in the beauty sector.

In one way, M&A activities in this industry have increased, with beauty brands making substantial profits. However, the COVID19 virus has prompted more customers to purchase products for their skin on the internet instead of in retail stores, increasing the revenue of cosmetics brands sold directly to consumers and raising their value.

“CaitlinStrandberg, a partner at the investment firm LererHippeau, who has invested in the skincare brand Topicals as well as the health and wellness company Cure Hydration, stated, This area makes a big amount of money. Companies valued at billions of dollars, more fundraising and M&A activity in the field, and investments that are starting to look very much like venture returns than before.”

It isn’t an area that has received a lot of interest from conventional venture capital. According to TrueBeautyVentures co-founder CristinaNunez, the traditional VC seeks high returns in a shorter amount of time. The company concentrates on investing in companies in wellness and beauty.

Beauty, a consumer packagedgoods segment, is a high-input inventory and doesn’t fit into the typical profile of a venture capitalist. As a result, typical VCs with no prior expertise in the beauty industry adopted a “see and wait” approach to investing in this sector, focusing on market appropriateness and other factors before making a decision.

“I think that when you examine the return profile for tech companies, this doesn’t exist in the realm of beauty,” Nunez said. “There are only a handful of assets that had cosmetic and beauty been able to scale that much and were sold to strategic buyers.”

Additionally, beauty isn’t an area that is well-known by many investors, considering how the male-dominated venture capital market is, as per Strandberg.

A market that is growing

Beauty and cosmetics companies, on the other hand, have grown increasingly appealing to venture capitalists for a variety of reasons.

Nunez claims that investors may now invest in sectors like marketplaces, social commerce, and direct-to-consumer models, since they are more familiar with them.

The market has been expanded beyond just beauty, skincare, and cosmetics to encompass wellness brands like sexual health. The entrance hurdle has never been lower: instead of relying on retail partnerships, indie businesses can now start selling directly to consumers online. Every day, new cosmetics items are introduced, meaning that more companies are looking for investment.

“Where there was a demand for capital is VC interest, and there’s been a huge growth in independent companies who are seeking money,” Nunez said.

The COVID19 pandemic negatively affected cosmetics with color (think blush, eyeshadow, and similar) since people weren’t out or socializing more and so many people turned to haircare, skincare, and wellness products.

When establishments closed their doors or shortened their hours due to the pandemic, customers turned to the Internet, even if they had never purchased anything online before.

“It’s an industry that’s gone across the web en masse, I’d guess, and the rate of adoption by customers is higher than it was before,” Strandberg said.

Exits

The beauty business has seen a rise in interest as a result of M&A activities. There’s a better motive to invest in a certain industry in a sector where buyers are interested.

Kim Kardashian’s KKW Beauty and KylieJenner’s KylieCosmetics, both digitally native cosmetics brands, were bought by the giant cosmetics Coty in exchange for major and minor stakes, respectively, which means they have the equivalent of billions of dollars. Estee Lauder has also has paid $1.7billion to acquire Be Co. in 2019 & Korean beauty brand Have and $1.5billion to TooFacedCosmetics in 2016.

Glossier, a company funded by venture capitalists, has also attracted billiondollar valuations. As a result, investors’ attention has shifted to the beauty business. The importance of beauty was reflected in the quantity of money earned by this industry. Between 2016 and 2020, the median amount funded by VC-backed startups in the cosmetics and beauty categories was between one million and $1.4million, according to Crunchbase statistics, which grew to $3.2million by 2021.

This week, the beauty brand Merit announced a $20million Series A headed by the late LCatterton with the participation of Sonoma Brands and Marcy Venture Partners, the VC firm established by businessman and rapper Jay-Z as well as Roc Nation’s founder JayBrown. According to Crunchbase research, the round of money is the largest SeriesA ever raised by a VC-backed cosmetics and beauty company so far this year.

According to Nunez, it differs from standard venture capital investing. The top winners might be chosen to acquire these bigger profits. Although this is not a high-growth area, it helps if you have a background in beauty.

“It’s an altogether different way of thinking than typical venture capitalists have had,” Nunez explained, “and to play well in the area of beauty, you must possess that mindset.”

In the last one and a half years, haircare and skincare companies have been the top candidates for capital, as per Nunez. Since more people are socializing, she anticipates companies selling color cosmetics to look for money.

“When you consider the entire market, color cosmetics make up most of the business. It will be interesting to see how it changes up once more,” she said.