Function of Beauty has raised a $150 million Series B from L Catterton.
The business will use the money to continue scaling its personalized beauty operation, which launched in 2016 with custom hair products, and this year expanded into body and skin care.
WWD had previously reported that Function of Beauty was expected to come to market in 2020, and that the firm was close to inking a deal.
“It’s been a while in the making,” said Zahir Dossa, Function of Beauty’s chief executive officer and cofounder. “We’ve taken our time to finally get the right and perfect partner for us. We’ve been running pretty lean and with a lot of debt up until this year, and finally found a really great partner to help us go to the next level.”
The last time Function of Beauty formally raised was in 2017, when the company raised a $9.5 million Series A led by GGV Capital. Since then, Dossa said the company had done “some informal bridge rounds” including convertible notes, and had “traditional debt.”
Right now, most of Function of Beauty’s sales come from the U.S., but with the influx of capital, Dossa sees the opportunity to build out the brand globally, he said. Function of Beauty currently is in 45 different markets, but isn’t deeply penetrated in most of them, he said. Canada, the U.K. and Australia are the next biggest markets after the U.S., he said.
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“Beyond the markets we haven’t gotten into there’s so much growth for us in the markets that we have gotten into. There’s no way the U.K., Australia and Canada should be our next biggest markets, technically, when you think about population, GDP, etc. Those are just the ones that we entered first,” Dossa said.
“There’s a lot of room for us to keep growing,” he added, noting that marketing on a local level is part of the plan.
There’s also room to enter new markets, he said — Function of Beauty has “barely” gone into Latin America, and is not in China.
Outside of global opportunities, Dossa said that the business will keep creating new products. While the company launched into new categories this year, the product assortments in body and skin care are still small.
“We started Function of Beauty with the idea of making personalization a norm, not a niche, and that was personalization across all beauty, not just hair care,” Dossa said. “Recent launches into both body and skin care, a lot of this capital is going to be used to really help us double down in those sectors as well.”
Function of Beauty was early to the personalized beauty movement, launching in 2016 with a quiz that guides shoppers through a series of questions to ultimately determine what products they receive. The business is vertically integrated, which Dossa said is one of the keys that has allowed it to expand.
Industry sources said the business has about $100 million in sales, and was seen in the market seeking a $1 billion valuation and having conversations with strategic buyers.
Dossa declined to comment on the company’s sales or valuation, but said it has been “hounded” by strategic suitors since it launched. “Every single CPG player realizes how important customization and personalization is. As long as that’s the case, we would be the ideal target for every single one of them,” he said.
With the L Catterton deal, Function of Beauty remains majority employee-owned, he said. He owns part, as do co-founders Joshua Maciejewski and Hien Kaplan, and other employees.
“Our vision is in 10 or 20 years, customization is not only a norm it’s the expectation,” he said.
L Catterton partner Avik Pramanik said in a statement that Function of Beauty had “cracked the code of mass customization and is poised to redefine the beauty landscape.”
Goldman Sachs advised Function of Beauty on the deal.
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