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BFG Partners’ Elizabeth Earle on beauty: ‘Staying top of mind doesn’t just involve throwing money at Facebook’

Behind some of the buzziest indie beauty brands right now is early-stage venture capital firm BFG Partners.

BFG Partners counts several beauty brands in its portfolio including acne brand Zitsticka, skin-care brand Herbivore, and sunscreen brand Vacation. And on April 25, BFG textured hair-care portfolio brand Curlsmith announced its acquisition by Helen of Troy for $150 million. Curlsmith was founded in 2017 and sold at Ulta Beauty in the U.S. Helen of Troy said in its acquisition announcement that Curlsmith will immediately become the most profitable brand in its portfolio. Curlsmith’s sales doubled from 2020-2021 and are projected to continue growing in the double digits. Helen of Troy also owns Drybar’s product business and has an exclusive global license for Revlon hair-care appliances.

BFG Partners’ original investment focus was on food and beverage, but expanded to beauty and personal care on the heels of the better-for-you trend extending outside of traditional grocery, said Elizabeth Earle, vp at BFG Partners.

“We’re always thinking about ways to reinvent categories that are pretty familiar to people already, in new or creative ways. BFG cut our teeth in the food and beverage world and more recently have extended our thesis into the personal care space,” said Earle. “So much of what has fueled growth on grocery store shelves, such as transparency of supply chains and thoughtful consumerism, is more applicable to what people are using now in their home and on their body.”

Earle, who led investments behind Curlsmith and Zitsticka, spoke to Glossy about what drove the Curlsmith acquisition, what she looks for in potential brands and what she views as a red flag. The below conversation has been lightly edited and condensed for clarity.

What interested BFG in Curlsmith?
“We first invested [in Curlsmith] back in the middle of 2020. When we were looking at the business, there were a couple of things we were impressed with right off the bat. It was a capital-efficient business and had gotten to a pretty meaningful scale without a ton of investment dollars. They were also sitting in this category that has traditionally been pretty underserved by larger CPG businesses in the textured hair-care space. There are certainly a lot of brands thinking more about it now and we liked that, within the hair-care space, Curlsmith was thinking about better-for-you products for a customer community served by products that use heavy chemicals. Curlsmith is offering efficacious products with an innovation pipeline driven by their core customer base. They had an open line of communication with their loyal customers.”

How else has Curlsmith or other portfolio investments been able to stand out to you?
“Curlsmith has been able to stay top of mind for customers in the personal care world. The brand started within Facebook groups focused on textured hair care. Curlsmith did a nice job of maintaining connections to those micro-communities of people who were already talking about hair concerns, quick fixes and hacks they had for their hair and using them as innovations for the new products they were putting out. Then they brought that community to other social media platforms like Instagram and Tiktok.

In personal care, when you’re not buying products every week or month, staying top of mind doesn’t just involve throwing money at Facebook and Instagram ads. [Avoiding that] is both a strategic concern and initiative for a lot of brands, and the ones that do it [right] have a leg up. Vacation, which is focused on a whimsical lifestyle that draws on 1980s Club Med culture, has an affiliation with an online radio station. There are plenty of ways there to remind people that this is the fun sun-care brand you want by the pool this summer, without necessarily pushing that message directly on Facebook or Instagram. Zitsticka is [creating conversations with customers] through discussions about acne care and embarrassing stories related to acne or body care. They’re circumventing the [issue] that digital marketing has become so expensive.”

What is the biggest change to the investment space recently?
“Pretty much across the board, capital efficiency has become more important, and I don’t see that slowing down or stopping. In personal care, the products are traditionally higher margin but not purchased as frequently as something like food. Products that are profitable and accretive to a brand’s overall profit and loss are more and more important. What we’re seeing on the exit side, whether it’s traditional CPG or other financial sponsors, is that they’re thinking more about the bottom line of the P&L of any acquisitions than they have in the past. It may become even more important going into the next couple of years. It’s important for a couple of reasons. For obvious reasons, it makes M&A work easier for a larger CPG portfolio. And the last two years have been volatile in the financial markets. A brand that can demonstrate consistent profitability offers that extra degree of security [for investors].”

What is a red flag to you when evaluating potential investments?
“One of the things I see a lot, especially in personal care, is a brand that has done something well and extends into too many products or too many categories too quickly. Having a brand that can exist across multiple products and use cases is important. But given the competition out there, and how many new brands are starting up, there’s a temptation for brands to take a product or a series of products that people love and extend it into other use cases. It spreads teams too thin. You’re working in a world of inherently limited resources within a startup. The knowledge and thought process that goes behind a strong innovation pipeline is incredibly important to us, retailers and potential acquirers, but it doesn’t mean executing on all of those potential innovations super fast. Brands that haven’t quite hit a couple million in annual sales and are starting to move into three, four or five categories make me a little nervous.”

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