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Companies & industry

Beauty startups and the challenge of growth

How do young cosmetics brands manage to settle on the market for good? Among the many brands launched every year, it is estimated that only 20% last over three years. Learning to grow is a challenge that matches that of creation, as can be seen with some of these young French gems: Sillages Paris, La Canopée, Ho Karan, My Beauty Community, and Gallinée, which have shown remarkable dynamics in their development.

On the hyper-competitive beauty market, the key to last lies in the validity of the product or service offered. This obvious fact is subject to the filter of an increasingly well-informed, hyper-connected population. “The first selection occurs quite early. The product reality vs the brand promise is essential. You cannot fool consumers for long in this world exacerbated by influencers and social media,” observes Maxime Garcia-Janin, creator of Sillages Paris, the first fully online, customizable Haute Parfumerie brand.

The relevance of the product to its potential target also depends on the choice of an adapted distribution channel. “Entrepreneurs often focus on making their products perfect, whereas first, they need to find their distribution channel to make the best-adapted offer,” explains Laure Bouguen, founder of the Ho Karan brand, a natural, vegan, made in France range with a flagship ingredient: cannabis. “Initially, we had planned to be distributed in pharmacies and through organic networks, but it is actually when we found our own place in the selective world that we were able to develop, although we had to adapt the product to match this channel’s criteria,” she adds. After a first version intended for men launched in 2016, the brand was revamped to become mixed and offer new formulas and packaging.

The key fundraising phase

Once it is on the right track, the young brand can be faced with the other side of success. So, to avoid disappointing its new customers, it should be able to meet their expectations through a better-structured development strategy. “The limiting factor for all young brands is the company cash. It is tricky to anticipate stock management and advance production fees,” explains Marie Drago, creator of Gallinée, a range of skin microbiome-balancing skincare products which has enjoyed a three-digit growth for three years – since it was founded. “Distributors pay brands quite late after they have been delivered the products, although these have already been paid for to manufacturers. All this creates a real need in terms of working capital,” she adds. Then, in addition to these production and cash management constraints, there are new logistics, marketing and communication needs, so you need to find new recruits for your team. As a result, Marie Drago chose a minority shareholder for its capital: Unilever Venture.

It is true I had to divest a minimal part of my shares, but I get much more than with a financing solution. I also get tips, I can reach new distributors, and I benefit from the support of experts,” says the entrepreneur.

Soon after it was created, Sillages Paris also started raising funds. “The brand was launched in November 2017, and in November 2018, L’Oréal bought into our capital with a minority investment, which helped us keep our independence. It was the first time the group had invested in a startup, which they thought was in line with perfumery’s evolution towards digital technologies. It is not only about financial resources, because we have access to mentors who help us with logistics, regulations, retail, online presence optimization… It is a real win-win partnership,” claims Maxime Garcia-Janin. Sillages Paris will open their first wholly-owned store next month.

As she is dealing with the success of her application, Marine Chevalier, co-founder of My Beauty Community, is looking for funds to structure her team and develop on the global level. Intended to guide users towards the best choice of cosmetic products, based on feedback shared by a tailor-made community, the app will soon celebrate its third anniversary – and it already counts 50,000 subscribers. “We are still the first players on the market to give the floor to consumers this way, which provides us with a widely recognized reference status as regards data, because we get an exceptional quantity of insights. We have been looking for funds to maintain this lead, it is crucial. But the key to our success is based on our independence from brands, so they cannot buy into our capital. It is up to us to find people who understand what we do, while remaining impartial,” she explains.

Based on these various approaches, Marine Chevalier highlights the importance of the network of experts or other startups, which is usually built up through incubators directly related to the cosmetics world or not. “It is important to spend time exchanging with other startups. It is not a waste of time, quite the contrary. It is cooperation!

How to manage growth

The need for additional funds at a key moment in brands’ development corresponds to an obligation to stay in the race, in this very fast-changing, competitive market. Still, they should keep their progress under control, without indulging in a growth frenzy. “We tend to forget that hypergrowth is as dangerous as undergrowth,” says Maxime Garcia-Janin.

This is confirmed by Juliette Munoz, co-founder with her sister of La Canopée, a range of 100% natural, vegan, made in France skincare products. “We started with our own website, which was an immediate success. Today, many e-shops offer La Canopée online, and we are present in 90 points of sale in France and Europe, and Thailand as well, soon. The difficulty lies in trying to go step by step, without rushing, and managing our growth so that we can develop in a healthy way,” says the founder.

After three years of research and development, the duo developed its range based on the “homemade” manufacturing concept. This deliberate running strategy provides great flexibility and independence as regards issues like cash management. “We control the whole chain, from sourcing to distribution, so we have no constraints related to manufacturers or money to pay in advance. It helps us keep things under control,” she emphasizes. To her, the challenge this year lies in entering new major export markets. “We need to understand how it works in regulatory terms, in every country, and go discover countries we don’t know…

Validating a driving, differentiating concept, being and remaining close to customers, choosing the right distribution channels, learning to meet the right experts, sharing experiences, finding financial support, while remaining independent, integrating the manufacturing chain, stepping back, staying in line with market trends and one’s basis… here are a few keys to success for brands willing to last!

Kristel Milet

Portfolio

  • Maxime Garcia-Janin, creator of Sillages Paris
  • Laure Bouguen, founder of the Ho Karan brand
  • The Ho Karan brand, founded by Laure Bouguen
  • Marie Drago, creator of Gallinée
  • Gallinée is a range of skin microbiome-balancing skincare products
  • Marine Chevalier, co-founder of My Beauty Community
  • My Beauty Community
  • Cécile and Juliette Munoz, co-founders of La Canopée
  • La Canopée, a range of 100% natural, vegan, made in France skincare (...)
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