DSG Consumer Partners Gets Beauty Giant L’Oreal’s Backing

Beefing up its strategic bets in the country, French cosmetics giant L’Oréal is investing an undisclosed amount in the India-focussed fund of Singapore-based venture capital (VC) firm DSG Consumer Partners.

The investment will be deployed for DSG’s fourth fund and is primarily targeted at backing early-stage startups in the consumer goods and beauty segment in Southeast Asia and India. The transaction was executed via L’Oréal’s corporate venture capital fund, BOLD. 

As per the cosmetics company, the move was driven by a young demographic in the region that was tilted towards buying beauty products. Pegged reportedly at $125 Mn, the fourth fund is expected to capitalise on the growth of beauty brands in the country and add upcoming big names in the space to its portfolio.

“We are excited to welcome L’Oréal as an investor in our ecosystem, and partner in our mission to invigorate the region’s industry disruptors and most promising startups… Through this fund, we aim to catalyse emerging market consumer innovation by working with entrepreneurs addressing new consumer aspirations and needs,” said the managing director at DSG Consumer Partners Deepak Shahdadpuri.

Chiming in, the president of L’Oréal’s South Asia Pacific, Middle East and North Africa (SAPMENA) region Vismay Sharma said, “… The future of consumer brands will largely be shaped in these markets (SEA and India), so it’s important to build a strong connection to its dynamic ecosystem of disruptors and invest in promising consumer brand startups.”

This marks the cosmetic major’s second investment in the country in the past three years. In 2019, L’Oreal invested an undisclosed amount in the third fund of early-stage-focussed VC firm Fireside Ventures.

The current investment was deployed through the BOLD (Business Opportunities for L’Oréal Development) fund which picks up minority stakes in high-growth companies and brands. The fund largely invests in areas such as consumer, marketing, digital and retail, and offers mentorship and networking opportunities for these burgeoning startups. 

The investment appears to be the brainchild of its Singapore-headquartered SAPMENA vertical which was established in 2021 and covers the fastest-growing, most populous and young demographic markets of the world.

The move is part of renewed efforts by the company to scale up its presence in the region and onboard growing players in the beauty space. 

Founded in 2012, DSG Consumer Partners largely backs consumer brands in India and Southeast Asia and has backed a slew of big names such as hospitality unicorn OYO, tea cafe chain Chai Point, dairy startup Epigamia, beverage startup Raw Pressery, and Veeba, among others.

This comes months after DSG led a funding round at Deepika Padukone’s D2C personal care startup 82°E. Before that, it also led funding round in luxury villa rental startup StayVista in September last year and followed it up with an investment in gifting startup Join Ventures last September.

The homegrown beauty market continues to grow at a breakneck speed and accounts for hundreds of D2C startups. This growth has largely been led by higher disposable income for middle-class families, millennials, and the availability of more options for fashion enthusiasts. 

This has led to a boom in the fortunes of such platforms. The past few years have seen the emergence of big brands such as listed beauty platform Nykaa as well as Mamaearth. Other players such as SUGAR, Lotus and Biotique have also seen a steep rise in revenues amid greater adoption among the masses. 

This has also attracted the interest of big conglomerates such as TATA and Reliance, which have also forayed into the space and have launched full-fledged omnichannel offerings. 

According to Inc42, the beauty and personal care segment is expected to continue as the fastest-growing D2C segment until 2030. India is estimated to be home to more than 122 Mn beauty shoppers by FY25, with the beauty space projected to zoom to a $5.6 Bn market opportunity by FY25.

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