Beauty & Wellness Briefing: 5 beauty trends that attracted investment and M&A deals in 2022

Beauty deal volume in the first half of 2022 stood at “just under 100 deals,” which was lower than 2021’s record year, according to PitchBook. Based on BeautyMatter data, the number of deals in the third quarter of 2022 declined by about 27% year-over-year. This slowdown was part of a broader pullback of VC funding overall in 2022, with a 62% decrease in late-stage deals in the third quarter as investors expressed concern about economic volatility.  

But there’s certainly activity, with investors and conglomerates still betting on virtually every beauty category with a broad spectrum of trends represented. 

But brands can’t just follow the trends to attract attention, investors say.  

“We love those first movers who are crusaders in the space, whether that’s in clean [beauty] or sustainability or a new category,” said Jenna Jackson, principal of growth at Cavu Consumer Partners, which invested this year in skin-care brand Topicals and body-care brand Nécessaire. “We’re thinking about who’s breaking the mold — who’s doing something differently and changing the way the customer shops and thinks about a category.”

While not a comprehensive look at the biggest beauty deals of 2022, below is a list of the standout trends that saw investment activity across multiple brands. According to investors and founders, these areas reflect significant industry turning points rather than short-term fads. With funding and M&A activity entering a downturn period, they hope these are the concepts that can provide stable growth for the long term. 

Eco awareness: Refillables, plastic alternatives and ocean-friendly products 

When it comes to beauty, investors are going green with bets on companies focused on sustainable packaging and ingredient sourcing. 

Refillable beauty products were especially popular among investors this year. In February, Blueland, focused on refillable home-cleaning products, received $20 million from private equity firm Prelude Growth Partners to expand its personal-care product lineup. That currently includes skin care, body wash and hand wash.

During the same month, several other refillable brands caught investors’ eyes. Refillable body-care brand Uni launched with $4 million in funding from Guy Oseary and Ashton Kutcher, among other investors. Makeup brand La Bouche Rouge, which is known for its refillable and plastic-free lipstick cases, raised 10 million euros from private equity firms Mirabaud Lifestyle Impact & Innovation, the Chalhoub Group and BPI. 

Refillable is “becoming more mainstream,” said Alicia Sontag, managing partner at Prelude Growth Partners. “These products are now available broadly across a number of channels, and consumers are actively seeking it out.”

In addition to what her firm calls “deep green” consumers, where “sustainability is the core of what they’re looking for,” Sontag said Blueland also appeals to “light green” shoppers. These are “people who want it all: They want efficacy; they want value, in terms of price; and they want something that can make them feel good, in terms of sustainability and the mission of the brand,” she said. 

Packaging innovation to cut down on plastic was also a win. For example, plastic-free skin-care brand Common Heir raised $2.5 million in February.

And sustainable ingredient sourcing mattered to investors. Estée Lauder Companies invested an undisclosed amount in sustainable seaweed-based brand Haeckels. 

Solving skin conditions 

Zits, dark spots, and bumps are a challenge for those afflicted with them, but they’re a big opportunity for VC investors. 

Products offering solutions for skin conditions were an investment hotspot this year. In November, skin-care startup Topicals received $10 million in funding for its OTC products addressing skin conditions such as hyperpigmentation, melasma, bumps and uneven texture. 

“We loved the idea of completely disrupting the OTC chronic skin condition market,” said Jackson, of Cavu’s investment in Topicals. “We loved the category [founder Olamide Olowe] was going after and disrupting, and the way she was disrupting it.”  

Acne care was also on investors’ radars, especially brands with acne patches in their portfolios. This fall, Hero Cosmetics was acquired by Church & Dwight for $630 million, Peace Out Skincare received $20 million from 5th Century Partners, and CPG company Heyday acquired ZitSticka. Those without acne patches also did well. Tula, which takes a probiotic-focused approach to its acne products, was acquired by Procter & Gamble in January, while Face Reality Skincare received a majority investment from Norwest Venture Partners in September.

Skinification of hair 

One of the biggest hair-care investment trends was also a skin-care trend. Briogeo, which was acquired in May by Wella Company, “is at the intersection of multiple trends,” said Annie Young-Scrivner, CEO of Wella Company. “It clearly addresses the skinification of hair and premiumization trends driving sustained growth in the $100 billion hair and nail categories.” 

“Briogeo spearheaded [scalp care] at Sephora,” said Jackson, who noted, “I’m starting to see a lot of deals and a lot of innovation in hair and scalp.” Her own firm got in on the trend in October with its investment in Nécessaire, which added scalp-focused hair care to its body care lineup in 2021.

Diverse and inclusive brands 

In the U.S., investors have long underinvested in brands offering products catering to BIPOC beauty consumers. More are starting to realize the missed opportunity. Beauty founders have been working to ensure that increased investment in diverse brands marks a long-term shift rather than temporary lip service. 

Topicals’ emphasis on inclusivity, for example, was part of its appeal to Cavu, said Jackson. And Briogeo’s commitment to diversity in serving all hair types, meanwhile, “aligns with our deep commitment to building a company with DEI and sustainability embedded into our core,” said Young-Scrivner. 

Multiple brands catering to textured hair also earned investment this year: Adwoa Beauty received a $4 million investment from Pendulum in September, while In Haircare, a supplements and hair-care brand for textured hair, received investment led by L’Occitane Group’s VC fund, Obratori, in March. Hair extensions brand Nourie, meanwhile, closed a $2.5 million seed round led by Impact America Fund, Better Ventures and SOSV’s IndieBio in September.

Inclusive makeup brands known for offering shade ranges for all skin tones have also attracted investors this year. Mented Cosmetics closed a $5 million Series A round in January, while The Lip Bar Inc. closed a funding round of $6.7 million in September. The latter was led by strategic growth investing and advisory platform Pendulum, with Endeavor and The Fearless Fund contributing. 

Clean with a standout concept 

Finally, beauty brands falling under the sometimes nebulous definition of “clean” dominated investments this year. But “clean alone is table stakes,” said Jackson, who emphasized that clean beauty brands need a more developed concept to attract investors. When it came to Cavu’s investment for an undisclosed amount in Nécessaire, for example, the brand’s innovation in the body care category was just as important as its ingredient list.  

“We feel that Nécessaire led the charge toward thinking about body care. Now, the consumer thinks about it and is looking for clean, effective ways to treat their body,” said Jackson. 

Nearly every major beauty conglomerate now has at least one clean-identifying brand in their portfolio. Companies to acquire clean brands this year included Clarins parent company Famille C, which acquired Ilia in March; L’Occitane, which acquired Grown Alchemist that same month; and Amorepacific, which acquired Tata Harper in September. 

Innbeauty, meanwhile, which closed a $12 million Series B round in on December 13, leans on more than just clean ingredients. While it is sold at Credo Beauty and has a “Clean at Sephora” designation, it also focuses its marketing on its ingredient efficacy, its accessible pricing and its colorful, Gen Z-friendly branding.

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