How True Beauty Ventures became a leader in the beauty space

Beauty is big business, and in 2021 that growth exploded. That year, a staggering $3.3 billion was raised in venture capital for beauty and wellness startups. Some of the checks were cut by VC titans like Tiger Global Management dipping their toe into the space, but that hasn’t always been the road to success.

Specialized funds are increasingly proving that deploying the biggest cash pile doesn’t necessarily mean you’re onto the next L’Oréal. True Beauty Ventures has carved out its own niche, quietly forging a path on a smaller scale that’s making a big impact.

Launched in 2020 by Rich Gersten and Cristina Nuñez, it isn’t your typical investment firm. True Beauty Ventures caps its funding at just $5 million, far less than some private equity firms are shelling out.

“We’re willing to write a smaller check, but we operate and behave like traditional private equity investors,” said Gersten. “I think that our unique point of differentiation is our sector specialization.”

The firm focuses solely on beauty and wellness companies and helps brand founders scale their businesses not just with financial assistance, but through mentorship and networking.

Small check, big reward

True Beauty Ventures currently has a roster of 20 brands that includes Vacation, Crown Affair, Caliray, Dieux, and others. Gersten says smaller checks are a huge part of the unique value proposition the firm provides.

“I kept finding myself encountering small brands who would love to have had an investor like me who could help add value and do the space really well, but they were looking for $2 or $3 million, and my minimum was $15 [million], which was small by PE standards,” Gersten said. He says he met brands that went on to sell for large sums of money, but he just didn’t have the mandate to engage with them.

True Beauty isn’t just bringing money to the table of course, but also industry expertise and a hefty rolodex built from years of experience. Gersten explains that access to data and analytics are invaluable to companies looking to make their mark—that, and knowing the right move to make next. “We’re not running day-to-day [operations]. We’re just very important thought partners and sounding boards for our founders,” he said. 

A big win came in the form of hair care brand K18, the firm’s first investment, which was acquired by Unilever in late 2023 for an undisclosed sum.

“We knew we had something special in the product,” he said. “What they had to do, ultimately, was build out a real heavy marketing organization that could create the understanding of the science and technology in a way that a consumer could understand that wasn’t geeky, but consumer friendly—and they nailed it.” True Beauty Ventures gradually increased its ownership in K18 as the company scaled and eventually reaped the benefits. According to Gersten, it returned around 80% of the fund’s capital. Other recent success stories include its partnership with makeup artist Hung Vanngo’s namesake cosmetics brand, which launched this month with Sephora as its exclusive retail partner.

Finding the right fit

For a seasoned veteran like Gersten, identifying a brand that has scaling power means leaning on key principles.

Gersten considers multiple Ps: people (the brand founder), product being “exceptional and differentiated,” and positioning, meaning the brand’s messaging and proposition.

He said the latest P to join the list—one that he’s always thought was important—is profitability.

“When you’re at an early-stage brand, odds of them being profitable aren’t very good, but do they have a strong gross margin profile? Because then as revenue scales, we can be more capital efficient the more that flows down,” he said. Then it’s just down to efficient capital deployment. Gersten says founders don’t want to raise, say, $10 million just because it’s available. “You’ll end up owning too small a percentage of the business.”

As for the near future, he said the firm has 50% left in its current fund and plans on holding another fundraising round next year. He has no plans to change up his investment strategy as it continues to prove to be successful. This also means staying small.

“The more successful you are, the easier it is to raise money, the harder it is to write smaller checks. I don’t want to get sucked into that,” he said.