By Pritika Gupta

The beauty industry often confirms the veracity of an important business principle: New entrants can expect harsh reactions from existing players when the market is not growing and their market share is threatened.

The 5.86% revenue growth (CAGR 2022- 2026) of the $85bn US beauty industry (and particularly the 30% YoY revenue growth of the Prestige Beauty segment from 2020 – 21) allows for new entrants to serve niches without prompting a response from larger, more established players. A key component of becoming scale players in the beauty industry has been access to offline distribution. The rise of beauty accelerators in the US is increasingly empowering smaller DTC brands to meet this challenge.

Caroline Weintraub, Vice President at True Beauty Ventures (TBV), who sees upwards of 30 beauty pitches a week, explains, “It’s never been easier to start a brand. It’s not as capital intensive and the cost structure has changed given tools such as Shopify and the rise of social media marketing.”

“However,” Weintraub adds, “competition and access to capital makes it tougher to scale.” The primary hurdles of distribution are being solved, to some extent, by major retailers who are extending their own brand-building expertise and national networks through their accelerator programs. Target introduced 40 new beauty brands in stores and online through Target Takeoff, Ulta has announced their selection of 8 early stage BIPOC brands that will participate in their Muse Accelerator Program, and Sephora Accelerate introduced 10 more BIPOC brands in year 2 of the program.


The primary hurdles of distribution are being solved, to some extent, by major retailers who are extending their own brand-building expertise and national networks through their accelerator programs.


It is important to note that these accelerators accept startups across different stages and categories. The Muse program requires “early stage with market presence, awareness or have DTC revenue” while Target requires that the, “Product must demonstrate existing traction in the market proven by social media engagement, revenue growth or growing customer base. They also must have mass manufacturing and supply chain capabilities that are ready for retail.” Sephora Accelerate, however, requires none of these criteria.

The majority of these newer, more innovative brands are Direct To Consumer (DTC), bolstered by the growing online nature of purchases. However, the overarching sentiment from retailers such as Target, Ulta and Sephora continues to be that, for high-experience products like color cosmetics and skincare, brick and mortar retail is still vital. This is further validated by the fact that a majority of the investments by TBV are in omni channel brands, who see the distribution as an important criteria for their investment thesis.

For Nikita Charuza, a former leading beauty and fashion-editor-turned-beauty-founder, being one of the 8 brands and the only South Asian inspired brand selected for the Muse Accelerator is a dream come true. In 2021, Nikita founded Squigs Beauty, a DTC brand rooted in Ayurveda that focuses on both haircare and skincare – something she likes to call Happy Headcare She says, “The beauty industry is getting increasingly saturated, and while we at Squigs believe that we are differentiated from other hair care and skincare brands brands, it is a huge stamp of approval to have a major retailer see the white space that we occupy in the industry.”


The overarching sentiment from retailers such as Target, Ulta and Sephora continues to be that, for high-experience products like color cosmetics and skincare, brick and mortar retail is still vital.


Priyanka Ganjoo, founder of Kulfi Beauty and part of the inaugural cohort of Sephora Accelerate, echoes Charuza’s excitement and gratitude one year on. “Sephora Accelerate was so instrumental in getting us into Sephora, helping us launch online and in stores. Without the program, building a strategic partnership with Sephora would have been challenging, especially for a BIPOC owned brand.”

The final player in this ecosystem is the investing arm of major beauty companies. Most recently, L’Oréal’s venture capital fund BOLD (Business Opportunities for L’Oréal Development) acquired a minority stake in Sparty, a Japanese start-up focused on personalized beauty. Similarly, Estée Lauder Companies (ELC) started off with a minority stake in Deciem before acquiring the brand. Across the board, Corporate venture funds are trying to understand the segmentation of these early brands, comprehend their innovation, and hopefully chart the path for an acquisition.

Weintraub explains this in a more nuanced way. “Even if these beauty leaders have large R&D budgets, they also have red tape, bureaucracy and processes that make it far easier to acquire brands instead of creating products to serve those niches. So for instance, instead of creating a clean, makeup/ skincare hybrid beauty brand, it makes more sense for the Famille C Venture Fund (run by the Courtin-Clarins family) to acquire Ilia since it allows the brand (Ilia) to capitalize on their resources for faster growth and it allows Famille C to capitalize on a brand with a strong identity, community and presence in the market.”


“Even if these beauty leaders have large R&D budgets, they also have red tape, bureaucracy and processes that make it far easier to acquire brands instead of creating products to serve those niches.”


Ju Rhyu, founder and CEO of Hero Cosmetics (recently sold to Church and Dwight for $630 million) emphasizes finding the right partner for brands as being key to any eventual acquisition. “If you are a consumer brand in beauty, no acquirer will pay tech multiples. Rather, they will pay beauty and personal care multiples. Therefore, you have to make sure you are aligning with the right people who have the right expectations for your business so that you can one day successfully exit.”

It is both unfair and untrue to state that accelerators are the only way for brands to be successful. And, while the next big beauty brand can emerge anywhere, beauty accelerators are creating ecosystems that can address white spaces in beauty and build a pipeline for acquisition by beauty conglomerates. Perhaps more importantly, they are also inadvertently creating seats at a much larger table for brands that represent underserved segments and creating the runway for them to find their way to institutional players at a global scale.


Pritika Gupta (’21) is an alumnus of Columbia Business School. She is currently a Senior Strategic Operations Manager at Uber and previously served as the Head of Partnerships at Kulfi Beauty.

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