Look out strategics. There are recent, formidable competitors on the sweetness M&A scene: family and individual investors.

While some are taking minority stakes in or wholly snapping up indie brands, others are willing — and able — to shell out as much as billions for major acquisitions.

This yr, all eyes were on the Aesop, valued at greater than $2.5 billion, which ultimately signed an agreement with L’Oréal. But in the most recent stage of negotiations, the Courtin family, which owns Groupe Clarins, was vying against the world’s largest beauty company for the Australian beauty brand through its investment arm Famille C Participations.

Famille C Participations has been energetic in beauty as of late. In March 2022, it acquired the buzzy clean brand Ilia and in April of this yr it snapped up Pai Skincare.

And the Courtin family just isn’t alone. Caudalie founders Mathilde and Bertrand Thomas invested an estimated 1 million euros, based on industry sources, in Talm, a high-end dermo cosmetics brand within the maternity space, in May. And Natalia Vodianova, married to LVMH Moët Hennessy Louis Vuitton scion Antoine Arnault, and her business partner Timon Afinsky took a minority stake in Decree skincare in June.

“There’s greater availability to families and individuals on some deals than previously,” said Sam McKay, founder and partner at Point King Capital.

The deal-making landscape has modified dramatically attributable to a confluence of things.

Twenty years ago, barely anyone was taking a look at beauty investments — especially within the area of interest category. Since around 2010, nevertheless, plenty of private equity and enterprise capital has been poured into consumer goods, resembling tech, which is cyclical, and fashion, which will be dangerous. Beauty can offer great returns, and today there are various emerging brands showing value-creation potential. So investors have taken note and are investing more cash into the space.

“Luxury and wonder, and tech, are the 2 categories that supply the very best margins when you’re successful — and don’t require massive capital,” said Joël Palix, founding father of boutique consultancy Palix Unlimited. “Luxury and wonder are recession-proof, showing incredible resilience yr after yr, so this makes the category very appealing to individuals and family investments.”

In tech, a sector that recently imploded, many individuals had their investment exposure in corporations through funds, somewhat than individual positions. Subsequently today, a few of them are looking more for direct investment opportunities, without the volatility of monthly or quarterly reporting.

“They often prefer to take a position directly in a personal opportunity, somewhat than at all times being in a blind pool structure,” added one industry expert. That’s where limited partnerships raise funds from investors, but don’t reveal where their money can be placed. “I’m seeing that trend proceed, where family offices wish to do more direct investing,” said the expert.  

Wealthy families have gleaned a greater understanding in regards to the beauty category — where some earlier stage businesses have demanded huge valuations — since, partly, it has been more widely covered by general news outlets. They increasingly realize they would not have to only depend on standard private equity.

“There may be a greater level of sophistication inside family offices, when it comes to their ability to raised evaluate investment opportunities. A few of those are proprietary in nature,” said McKay.

A lot of family offices are coinvesting, banding together and sometimes offering different expertise. The family offices that invested in Biologique Recherche in fall 2019, as an example, included the Van Rappard, Christopher Descours and Frère family offices in Europe, alongside Peter Brabeck-Letmathe, the previous chief executive officer of Nestlé Group.

There stays great room to grow. “Beauty continues to be relatively unknown throughout the family office environment,” said the industry expert.

Meanwhile, the supply of beauty investment opportunities has increased, partly attributable to company founders realizing they like to avoid institutional fund structures, where they’re forced into the timing of a liquidity event or a sale which will differ from their very own view regarding how long they wish to hold an asset. “Typically, families or family offices are more patient capital,” said McKay.

As people’s net value has been expanding, the brink to entry for investors into beauty has lowered, starting around 10 million euros to fifteen million euros today, based on industry experts.

All this has helped change the sport.

“The world is beginning to collide between skilled institutional investors and family office, high-net-worth investors,” said McKay, who has seen the phenomenon increase over time.

Based on Ariel Ohana, a cofounder and principal at boutique investment firm Ohana & Co., there are three forms of family investors in beauty. The primary are second-generation families that own incumbent beauty brands, resembling Famille C Participations, William Fisher family’s Manzanita Capital and the Wertheimer-Heilbronn family’s Mousse Partners.

“There may be a second, newer group, which consists of entrepreneurs who’ve recently sold their businesses and are reinvesting within the space,” said Ohana. “It is extremely just like what we’ve been seeing within the tech space for a long time.”

On this category are people resembling Christophe Cervasel and Sylvie Ganter-Cervasel, cofounders of Atelier Cologne, which was sold to L’Oréal in 2016.

“The trend of entrepreneurs reinvesting within the industry is certainly gaining momentum,” said Ohana. “That is as much driven by the very rational concept that you must put money into stuff you are good at, because it is driven by a real desire by entrepreneurs who cashed out to support fellow entrepreneurs.”

“It’s a healthy ecosystem, where some money is recycled and investors higher understand the space now,” said Palix.

Seasoned entrepreneurs may also help counsel newer entrepreneurs, especially as they scale their businesses from 10 million euros to 100 million euros in sales, and their roles evolve.

“Often, entrepreneurs are obsessed with brand and product, but they’re probably not good at human resource management, team-building and operational supply-chain scaling,” said one insider. “They wish to spend their time innovating.”

Ohana outlined the third category consists of outstanding, non-western families making investments in western brands. Here, some examples are the Cheng family, based in China, which is investing through C Ventures and Latest World Ventures. Within the Middle East there may be the Chalhoub family’s Chalhoub Corporate Ventures & Acquisition fund.

The Ohana family itself has recently formed a dedicated family investment vehicle.

“We’re really just searching for inspiring entrepreneurs,” said Ohana. “I could let you know we’re searching for white space or innovation, but really, we consider that great entrepreneurs can bring a novel approach for consumers, even in essentially the most saturated spaces.

“One thing we do require for family investments is a commitment to a cleaner and fairer world,” he continued. “This will be done through the use of unpolluted ingredients, or sustainability in packaging or materials, or giving back to the community.”

There are alternative ways to smell out hot brands. Famille C Participations executives take a hands-on approach to reconnaissance. “As soon as I see a brand I like, I test the products myself,” said Prisca Courtin, founder and CEO of Famille C Participations. “Then, if I like them, I pass them to Clarins R&D [research and development]. There it’s either ‘yes’ or ‘no.’ It’s scientific,” she explained, adding that strategic filter phase is rigorous. “It’s necessary for me to have that opinion.”

Should the products pass muster, Courtin further examines the brand — its profitability and the promote it is in. “We study the potential and immediately take a look at the synergies there may very well be with Clarins,” said Courtin. “We prefer to go for brands which are complementary, but don’t do the exact same thing and have a standard DNA.”

Brands presented by Courtin are voted on by her family and another executives, including Groupe Clarins CEO Jonathan Zrihen, who meet weekly. The bulk prevails and will the ayes have it, which has been the case in each instance up to now, a classic acquisition or minority investment process ensues.

“We don’t act in any respect like a fund,” said Courtin. “We have now the benefits of an investment fund, because we now have significant financial support, but we don’t have the disadvantages of a fund with short-term objectives.

“We have now very long-term vision,” she continued. “We like to depart the businesses we buy independence, leave them their autonomy. That’s why we don’t integrate them directly into Clarins.”

Famille C, begun in 2019, is the holding company owning Clarins and all of Clarins’ assets. Inside this, there may be Famille C Participations, which invests the family’s assets. Its deal tickets can range from 100,000 euros to billions of euros. It invests in diverse corporations, although the majority are beauty-related.

“They’re tools that help us in our beauty business,” said Courtin, adding the overarching goal for Famille C Participations is to change into the leader in responsible beauty, with a coherent brand portfolio. It has, as an example, taking a minority share in Launchmetrics.

“It’s a platform that enables us to discover micro-influencers for launches,” said Courtin.

Investment has also been made in Lumapps, a company intranet.

“That they had an application we found very interesting, especially at Clarins, because we prefer it when our employees are brand ambassadors and discuss Clarins,” she said.

Mirakl, which Courtin called a creative agency 2.0, is a tool for creating digital marketplaces. Famille C Participations also invests in biotech, to seek out alternatives to certain beauty product ingredients.

Another investments are in Ecovadis, the universal sustainability rankings provider, allowing corporations to administer their networks’ performances each upstream and downstream, and Le Collectionist digital platform, which enables people to rent luxury villas throughout Europe.

“With them we’re desirous about a partnership to make Clarins amenities,” said Courtin. “In addition they wish to offer spa services to their customers.”

On the pure beauty front, Famille C Participations owns Pai and Ilia, and has made minority investments in Joone and Ceremonia, all prestige brands.

“There are obvious and interesting synergies [with them],” said Courtin, adding Famille C Participations is betting on brands which have endurance over time: 30, 50 and even 100 years.

For Ilia founder Sasha Plavsic, Famille C Participations was something of a homecoming.

“The brand needed to seek out a house — one which was familiar,” said Plavsic. “I very much admire the legacy of Clarins, and what the family has built over the past 70 years.

“Their knowledge of growing a beauty brand one country at a time is incredibly powerful,” she continued. “But they did it well. Ilia continues to be a young brand, and we now have the chance to learn a lot from this partnership.”

Famille C Participations has been involved, as well, with quite a few funds from its start, and has purchased land and real estate, resembling a vineyard. “It’s a technique I even have from a heritage viewpoint,” said Courtin. “It’s necessary to have land assets.”

The aim just isn’t to take a position in plenty of corporations, although some beauty categories of interest include prestige hair care, pimples solutions, men’s skincare and sun filters. Countries on her radar for sourcing brands include Australia, India, Japan and Korea. “We just wish to have things with a standard thread,” said Courtin. “We actually need to take a position in brands that innovate, have quality formulas and — above all — are embodied by founders who wish to accompany us in the journey.”

With the investments, she goals to make a positive contribution from a sustainable development perspective and lift eco standards of the sweetness industry at large.

One other goal just isn’t to squash the brands invested in. “We allow them to be nimble,” said Courtin. “The founders are still on top of things. We offer them with all of the strategic resources they’ll need.”

The founders can search for levers of growth and synergies with Groupe Clarins and Zrihen. They and Famille C Participations executives make joint decisions, but are still given plenty of independence, said Courtin.

“It’s necessary for us,” she said, adding that the concept is to take a position for a number of more years as Famille C Participations is doing, then proceed growing those corporations, enabling money generated from them to guide to recent investments.

“In order that it’s a virtuous circle,” said Courtin. “That’s the concept for the long run generations. Leaving money and types just isn’t what’s necessary. What counts is doing it with conviction, to have contributed positively and to inform ourselves we’re pleased with what we’ve done.”

Manzanita Capital, founded by William Fisher, the son of Gap founders Donald and Doris Fisher, has been actively investing in the sweetness industry since around 2002. “We’ve at all times considered constructing great brands, finding incredibly unique and robust entrepreneurs, and partnering with them,” said Andras Szirtes, managing partner at Manzanita Capital, whose portfolio includes Diptyque, Malin + Goetz, Space NK and Susanne Kaufmann.

Manzanita doesn’t have a timeline for its investments, so somewhat is “evergreen.” That’s to say, the fund isn’t searching for an exit because it invests in an organization. It’s contrary to what number of other investors operate, since they need to return money to their investors by a certain date.

“We’re searching for just not a great brand, or a hot brand, because trends come and go,” said Szirtes. “The filter that we use on a regular basis is do we expect this brand goes to be around 10, 20 years from now?”

This echoes the stance of Courtin and other investors. Manzanita also hones in on whether a product is differentiated enough and whether the entrepreneurs behind a brand have each the know-how and determination to go the complete distance.

It helps with capital, contacts and know-how, and is under no pressure to ink plenty of deals. “It’s hard to seek out that unique combination of wonderful products, incredible brand and amazing people,” said Szirtes.

Manzanita then often holds onto investments for a very long time. It invested in Diptyque in 2006 and Space NK in 2003. “The businesses have grown tremendously since those times,” said Szirtes. “We’re searching for the entrepreneurs who really value the journey together, in addition to the ultimate final result. Fortunately, there are numerous people like that, they usually understand the actual magic happens while you do all the things well.”

Manzanita, which backed Swedish fragrance and lifestyle brand Byredo starting in 2013, sold the corporate to Puig, the Spanish family-owned beauty and fashion company in late May 2022. The office also sold Eve Lom to Yatsen, and Lipstick Queen was purchased by Morphe parent company, Forma Brands. 

Among the many challenges for family or individual investors are that some have a lack of awareness and experience in the sweetness industry, which might complicate sorting through the vast variety of opportunities presented.

“They often ask advisers to assist navigate the category and represent them on the boards of the businesses they put money into,” said Palix.

It could actually even be tricky to know when to bow out of an investment. “Once you track through the life cycles of what these family offices do, quite a crucial consideration is that in the event you’re long-term and evergreen, and don’t ever should sell — then when do you sell?” said one other industry expert.

This generally is a humbling experience, when a family office understands it isn’t any longer the correct shareholder for a business — since that activity has either gotten too big or is growing faster than the family office can properly handle.

“That’s really the considering for these family offices, to know when to step away,” the chief said, adding that will be difficult when an organization is growing by strong double-digits per yr.

The inverse situation — when business isn’t going well or the connection between investor and founder sours — is difficult, too. That will be disruptive to business decision-making if the investor disengages, or an issue mark hangs over how and when an exit might happen.

Still, there’s a palpable lather of pleasure amongst individual and family beauty investors.

Vodianova and Afinsky, former purpose-driven tech start-up founders, have been investing together for 10 years. Their priority is taking minority stakes in digital start-ups — mainly apps — within the spaces of skin and face, well-being and fashion. They’ve dubbed their company Supernova.

“We understood how difficult it’s, how incredible it’s” to be an entrepreneur, said Vodianova, explaining that journey gave them insights useful for energetic investors, who’re there to advise or hearken to founders.

“Sometimes they simply must run their ideas by individuals who have a wider view and who may give them unexpected feedback from a knowledge of seeing and hearing quite lots,” she continued. “As advisers and investors, we search for founders that understand that there must be vision and impact, nevertheless it has to go hand-in-hand with constructing a successful business.”

Their checks range from 50,000 euros to 750,000 euros.

“We at all times invest very early, in order that they’re very high-risk investments. That’s why we’re so involved because, in fact, we wish these investments to succeed,” said Vodianova.

Their first one was in PicsArt, an app for manipulating photographs on social media, which is now a unicorn, boasting greater than 1 billion creations day by day. Soon thereafter, they took a stake in Flo, an app to trace an individual’s ovulations and periods. “Female-centered health is something very under-researched, underfunded,” said Vodianova.

Flo, too, has taken off and is now utilized by greater than 280 million women. “Flo became this incredibly wide-purpose, very effective health tool for ladies basically, since it’s taking you out of your first period all of the approach to menopause,” she said.

Their most up-to-date investment has been in Soula, an app billed to be a virtual doula, an AI-powered assistant for pregnancy, birth and postpartum. “Globally, women face big issues — [including] mental health issues — on the subject of pregnancy,” said Vodianova, adding of Soula: “You may ask any query. It has this very humane language, it doesn’t feel clinical or alien. It speaks to you want a doula, like an individual.”

Pora, one other investment employing an AI-powered scan of an individual’s face, is alleged to be an unbiased, “smart skincare assistant,” capable of help consumers make the correct product selections for themselves. The duo’s most up-to-date investment was in Decree, an inclusive skincare line created by Dr. Anita Sturnham. “What really struck me with Decree was this amazing approach to a straightforward beauty routine, with excellent results, at inexpensive prices,” said Vodianova. “Together with her clinic, she’s seen hundreds of patients. The journey may be very honest.

“Still I feel there may be a lot for them to do, when it comes to the correct type of communication,” she said. “It’s fun to see the journey of a brand like this, which has just scaled within the U.K. and is now spilling over in other markets, which is sort of a sophisticated journey. I hope that I’ll give you the option to assist them with that.”

Vodianova said she and Afinsky never chase their founders. Relatively, those are expected to ask for help in the event that they need it and provides updates. There is mostly a call altogether once a month. “Sometimes we also connect the founders to one another,” she continued.

Other investments include in Lensa, an all-in-one image editing app that’s already helped create greater than 750 million avatars.

Vodianova and Afinsky have up to now invested in 32 corporations, of which five are unicorns. “We’re really fast at making decisions, because we will not be a fund, and we don’t take other people’s money,” she said.

By way of future investments, Vodianova is worried about where people get their nutrients from. They proceed watching the Web3 space, wherein they’ve already invested in a start-up called Loóna, a sleep-enhancing app.

“I’m really pleased with my female founders,” Vodianova said, citing for instance Rose Colcord, who created CouCou, a sustainable brand meant to be a hybrid of lingerie and underwear. “It’s really about constructing community, and this philosophy that you need to be yourself day by day.”

The Cervasels even have an eco-conscious bent. After selling their brand, they began studying naturopathy and began a family office, called Camélias, which was created to nurture socially conscious and environmentally responsible corporations.

Since August 2016, Camélias has taken minority stakes value between 50,000 euros and 100,000 euros in greater than 30 businesses, mostly impact corporations.

“We said we don’t want to depart the entrepreneurial world,” said Christophe Cervasel. “Still, today, I feel like an entrepreneur. Considered one of the explanations is that we remain involved with entrepreneurs. Once you find good individuals with great ideas, you simply wish to help them.”

That’s because the Cervasels were helped by dozens of business angels once they were starting out.

“It’s natural that we help these young those that are really willing to do something good,” said Cervasel. “Especially those who wish to help the environment and create a greater world.”

Their first beauty investment was in Aime Skincare, for inside-out beauty. It then put funds into What Matters, a sustainably minded, refillable organic skincare, personal hygiene and residential care brand, and Jolly Mama, maternity-related snacks and supplements. Most recently, it funded Respire, a clean, natural hygiene brand. “There [remain] many things to do in beauty,” said Cervasel. “There continues to be plenty of potential to grow.”

By way of their level of involvement, the duo might sit on company boards and seek the advice of — or not. “It really will depend on the founders,” he said, adding that if one wants his advice, Cervasel explains: “I’ll speak as if your organization was my company — I cannot do in a different way. And, in fact, we’re different, so then you definitely are free to do something else.”

One other couple, the Thomases, founded Caudalie in 1995, which had estimated sales of $341 million in 2022 and is ranked 81st on WWD Beauty Inc’s list of top 100 brands globally.

“We don’t have an exit strategy,” said Mathilde Thomas, of her skincare company that’s privately owned.

After returning to Europe a number of years ago, following eight years abroad, she and her husband began looking and younger corporations in search of their advice. “And we said, why not invest?” said Thomas.

They subsequently made three deals in the sweetness space. The primary was with Aime Skincare. The second was with Talm, and most recently, the Thomases have invested in Skin & Out, a natural brand for treating adult pimples.

The couple tends to take a position in corporations run by talented executives they’ve known. Considered one of the cofounders of Skin & Out, Amélie Desazars, had worked at Caudalie, for instance. “I do know she’s talented. She is real, believes in very clean products that work, has exquisite taste and great sense of product development,” said Mathilde Thomas.

She meets every six weeks with Kenza Keller, Talm’s founder and CEO.

“These are real work sessions, very useful for discussing the event of Talm and specifically all the problems inherent in a brand that’s growing rapidly,” said Keller.

“Mathilde and Bertrand Thomas, beyond their financial support, accompany me on major problems with the brand: product, distribution, communication,” she continued, calling them “true mentors, who allow me to visualise my ambition for Talm and to articulate the strategy that may make it possible to realize it within the years to return.”

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Some family and individual investors in the sweetness space

Camélias: Family office of Christophe Cervasel and Sylvie Ganter-Cervasel

Headquarters: Luxembourg

Current Beauty-Related Investments: Aime Cosmetics, What Matters, Respire, Jolly Mama

EPI: Christopher Descours family holding

Headquarters: France

Current Beauty-Related Investments: Biologique Recherche, Bonpoint

Eutopia: Pierre-Edouard Stérin’s consumer investment arm

Headquarters: France

Current Beauty-Related Investments: Oh My Cream!, Laboté, Même Cosmetics, Merci Handy

Famille C Participations: Courtin family holding company

Headquarters: France

Current Beauty-Related investments: Ilia, Pai Skincare, Ceremonia, Joone

Impala: Jacques Veyrat holding company

Headquarters: France

Current Beauty-Related Investments: Augustinus Bader, Laboratoire Native (including Roger & Gallet, Lierac, Phyto and Jowaé), P&B Group

Manzanita Capital: William Fisher family’s fund

Headquarters: U.K.

Current Beauty-Related Investments: Diptyque, Malin + Goetz, SpaceNK, Susanne Kaufmann, Glossier, Unbound, A-Frame, SuperOrdinary, Sam McKnight

Mathilde and Bertrand Thomas

Headquarters: France

Current Beauty-Related Investments: Aime Skincare, Talm, Skin & Out

Mousse Partners: Wertheimer-Heilbronn family office

Headquarters: USA

Current Beauty-Related Investments: Ulta Beauty, Counter Brands (Beautycounter parent), Evolve by Nature, Bravo Sierra

Ohana family

Headquarters: USA

Current Beauty-Related Investments: What Matters, Face D, Angela Caglia, Fré

Redo Enterprises: L’Occitane family office

Headquarters: USA

Current Beauty-Related Investments: Odacité, Alchemy 43, Loli, The Nue Co., Good Face Project, Dieux

Supernova: Natalia Vodianova and Timon Afinsky’s investment company

Headquarters: France

Current Beauty-Related Investments: Decree, Flo, Soula, Easy, Zing, Pora