Adit Broadens Portfolio Of Brand Matchmaking Services To Investment Channel

Adit, the service matching beauty brands with retailers, is launching an Investor Network to connect them with financial backers.

The network is kicking off with 15 top-tier early-stage investment firms, including CAVU Consumer Partners, NextWorld Evergreen, Sandbridge Capital, True Beauty Ventures, Unilever Ventures, SWAT Equity and VMG. Slots for additional investor partners will be open in September. 

“Retail partnerships are essential to long-term brand building and growth,” says Nader Naeymi-Rad, founder Indie Beauty Media Group, parent company of Adit and Beauty Independent. “And success at retail now requires timely access to capital to effectively activate and support wholesale channels. We know through our retailer relationships with Adit that today funding is a key criterion retailers examine when evaluating brands and their chances for success in their channel.” 

While obtaining funding can be an arduous process, Naeymi-Rad points out that there is greater interest from investors in the beauty industry and an uptick in firms getting involved with emerging beauty brands much earlier than they would’ve in the past. He says, “Five years ago it would’ve been unthinkable that VCs and other professional capital sources would be actively seeking to invest in brands doing less than $10 million in annual revenue.” 

VC firms and corporate-backed investment arms’ entrance into beauty has helped cover funding gaps for early-stage brands. Estée Lauder launched New Incubation Ventures in March 2021 and has made minority investments in Haeckels, Faculty and Vyrao. Founded in 2018, L’Oréal’s venture capital arm, Bold, zeros in on beauty technology and science. It’s invested in Prinker, SalonInteractive, Sparty and Gjosa, among several companies. Unilever Ventures’ portfolio has beauty and wellness brands Beauty Bakerie, BYBI, Exponent, Live Tinted, Saie, Womaness and Straand, to name a few. 

Backed by Unilever Ventures, Selva Ventures closed a $34 million fund in May to invest in consumer packaged goods brands in generating under $10 million in annual revenues. Crown Affair, Cake, Arrae, Kinship and OneSkin are beauty and wellness brands in its portfolio. Firms like True Beauty Ventures, Willow Growth and Access VC have specialized beauty expertise and are fueling challenger brands like Youthforia, K18, Bubble, Maude and Beekeepers Naturals.

The pool of brands and investors may be deeper than ever before, but the process of linking them together remains inefficient. Similar to retail buyers, investors often have to spend time sifting through their inboxes to read cold emails from brands or meeting with upstarts that don’t fit their investment thesis. In the three years since TBV was established, the firm has been approached by around 1,400 brands and invested in 13. 

“Collaborating with IBMG and Beauty Independent to develop the Bridge Mentorship program has been a great experience both for us and for the brands involved,” says TBV co-founder Cristina Nuñez. “The time and care that they have taken to develop something truly valuable for brands has been really impressive. This is why we are delighted to partner with them on the Adit Investor Network and continue helping the community—both brands and investors—connect efficiently and consistently.”

“We have developed a very specific point of view on what makes a beauty investment attractive for our growth equity fund,” says Tiffany Obenchain, managing partner at NextWorld Evergreen, which has prestige skincare brand True Botanicals and clean beauty retailer Credo in its portfolio. “With Adit, we can access a steady pipeline of qualified brands that we can efficiently review to determine if they align with our strategy. We also value Adit’s reach, from earlier stage beauty and wellness brands to more established players and retailers, which results in meaningful insights through all Adit interactions.” 

Natasha Gray, who leads Adit’s program, notes investors are different from retailers in that they have longer lead times and horizons. She details it’s not unusual for investment firms to develop relationships with brands for 12 to 18 months or longer before deciding to move forward with an investment.

“The majority of early-stage investors want to identify a brand early enough so that they can get to know the founder, learn about the brand, observe their performance and establish sufficient confidence around the opportunity before they consider making an investment,” says Gray. “Buyers can write purchase orders within weeks if they feel a brand is ready to launch in their store, but they can also divest of a brand much faster than an investor could dissolve a partnership. An investor is going to be with the brand for years, whereas a retailer can technically end a relationship and RTV [return to vendor] within months of the first meeting.”  

Adit’s Investor Network leverages its existing infrastructure of matchmaking services and live events to accelerate the relationships between brands and investors. By joining the Adit program and building an Adit Profile, a concise and standardized summary of key data, an Adit’s member brand obtains a “passport” that makes their brand discoverable by the top retailers and investors in beauty. Naeymi-Rad says, “They can meet retailers, and as their journey with retail becomes better defined, they now know they can go to investors to hopefully bring the capital support they need to be successful in retail.” 

Since its 2021 launch, Adit has helped hundreds of brands find the right wholesale partners. Its retail network currently features 35 retailers such as Erewhon, Ulta Beauty, Neiman Marcus, The Detox Market and Bluemercury.  “We love the Adit Profile,” says Lauren Marmorale, director of merchandising at Bluemercury, a prestige beauty retailer that’s been an Adit Retail Network member since 2021. “It contains exactly the right data for us to be able to quickly make a preliminary assessment of a brand. And the Adit team only presents us with profiles that they know fit our criteria, so no time is lost reviewing options that don’t align with our evolving needs.”

Adit’s programming will be growing. Its Retail and Investor Networks will be extended to more retailers and investors outside of the United States. The aim is hitting 40 retailers and 30 investors by the end of 2023. In 2024, Adit will be introducing a Consumer Media Network in 2024 to bring in leading beauty consumer press and media.  

“Like buyers and investors, editors get overwhelmed with pitches, 90%-plus of which are not relevant. Our media channel is going to package Adit members and their brand stories in a way that we can share with editors,” explains Naeymi-Rad. “Retailers want to amp up their assortment. Investors want to power their portfolios. Both are seeking innovations that are differentiated and which can drive long-term growth. And editors are looking for great ideas that can supercharge their storytelling. We will be able to activate all of these growth opportunities with Adit.”

Gray says, “We want a member brand’s Adit Profile to be the passport to as many opportunities as possible, whether with a buyer, investor or editor.”