What do incubation ventures mean for Indian beauty start-ups?

Shana Randhava talks about the shifting dynamics of the Indian beauty start-up space and how ventures like Beauty&You accelerate the nascent business

India is currently the third largest start-up ecosystem in the world. While technology, education, logistics and grocery delivery applications headline the start-up landscape in the country, beauty, as a sector, is swiftly running to secure a spot at the apex of the pyramid. In the recent past, Nykaa’s success story is a prime example of how the business of beauty has created a strong foothold in the Indian market. Numbers provide a deeper context. According to Statista, the market size of the Beauty & Personal Care industry, which stood at US$3 billion in 2010 and US$11.16 billion in 2017, is poised to expand to US$20 billion by 2025.  

Considering the potential of a prospective market like India, Nykaa and Estée Lauder Companies came together for the first time in 2022 to announce the launch of Beauty&You, an incubation venture to foster Indian beauty entrepreneurs across different stages of their start-ups—from ideation to inception, till execution. 

In 2023, a whopping 600-plus entries were registered from over 150 cities across the country. From providing financial and operational assistance to unlocking the opportunity to pitch one’s brand to a jury comprising the finest of the Indian beauty industry, multi-faceted programmes such as Beauty&You are then pivotal in shaping the mirco homegrown beauty sector. 

We speak to Shana Randhava, Senior Vice President at New Incubation Ventures (NIV), who is responsible for building the Estée Lauder Companies (ELC) early-stage investment and incubation strategy. Ever since its establishment in 2021, NIV has closed seven investments to date. Randhava talks about the shifting dynamics of the Indian beauty start-up space and shares how ventures like Beauty&You accelerate progress and, hopefully, profitability too. 

The Indian beauty space is up to something 

Indian-origin beauty brands are on a global radar, for both consumers as well as businesses. While major global acquisitions/investments include those of Kama Ayurveda and Forest Essentials by international conglomerates Puig and Estée Lauder respectively, a new wave of young, small-scale, homegrown brands has emerged too. Dearist, Flossy Cosmetics, Call of The Valley, SkinQ, and Ver were some of the nascent brands that participated in the second edition of Beauty&You all of these brands launched only in the past five years or so.

The aforementioned statistics are suggestive of the scope of the Indian beauty industry that is yet to be tapped. Is this then the biggest factor that entices investors like Randhava? “Over the past decade, there has been a noticeable surge in beauty start-ups,” begins Randhava. “With a constantly evolving definition of beauty and a sophisticated consumer with growing disposable income, the landscape represents an exciting opportunity for founders and creators to enter the market with a fresh take on what it means to be beautiful,” she shares.

In the next five years, India’s beauty and personal care market is set to grow at a compound annual growth rate (CAGR) of about double the global market growth rate. This will be driven across all categories—skincare, make-up, fragrance, and hair, which could be attributed to factors such as increased consumer demand for diverse and innovative products; advancements in technology; a growing focus on sustainability; and the rise of e-commerce facilitating market access for new entrants, states Randhava. “In the face of this growth, the competition between brands is skyrocketing. Consumers are overwhelmed by the breadth of choice and lack of brand differentiation and education. Despite the crowded market, consumers still feel underserved and have unmet needs due to the absence of brands and products that address their pain points—all of which highlight clear opportunities for emerging brands across product innovation, identifying underserved audiences, and innovating around experience, engagement, and education.”

The inception of Beauty&You

Beauty&You was launched in 2022 as a platform to give back to the Indian beauty community and inspire the next generation of entrepreneurs, shares Randhava. “The objective is to be a leading voice in fueling and amplifying entrepreneurship by presenting educational, networking and distribution opportunities to founders to support their growth and ambition.” 

“[It would also] leverage Nykaa’s position as a leading omnichannel beauty and lifestyle retailer in India. Partnerships with established platforms can provide start-ups with visibility, mentorship, and access to a broader audience,” shares Randhava on why the collaboration with Nykaa is strategic. 

Randhava provides a broader lens focusing on the various stages of Beauty&You. “The platform looks to identify innovative ideas and concepts that seek to address unmet consumer needs to create a new market opportunity. Winners are selected based on criteria specific to each category. For instance, the ‘Breakthrough’ category may focus on innovation in active ingredients, while the ‘Impact’ category may assess the most innovative corporate social responsibility programming. Judging likely considers uniqueness, potential impact, and alignment with category themes.” The winning brands gain access to a wealth of expertise from professionals within the industry. This guidance covers various aspects of the beauty business, including product development, marketing strategies, and industry trends. “This one-on-one guidance can help start-ups navigate challenges, capitalise on opportunities, and make informed decisions for long-term growth. They gain access to cutting-edge research, ingredients, and technologies, fostering innovation within their product lines.”

Can Beauty&You be game-changing for beauty start-ups?

“The impact would vary based on the specific needs and stage of development of each start-up. Early-stage start-ups often struggle with securing initial capital. Incubation ventures can provide much-needed funding to help with product development, market research, and establishing a solid foundation.” Funding, however, is just one part of the programme. Through Beauty&You, incubation often offers benefits like mentorship, networking opportunities, market access, and guidance from industry experts, says Randhava. “Start-ups gain access to a network of experienced mentors and industry leaders associated with Beauty&You, the Estée Lauder Companies, and Nykaa.”

Mentorship indeed is a key element of Beauty&You. “Guidance from experienced mentors can be invaluable for founders navigating the complexities of the beauty industry. Mentorship can help refine business strategies, avoid common pitfalls, and accelerate the learning curve,” says Randhava. “These mentors can provide valuable insights, guidance, and advice based on their own experiences in the beauty industry. Mentorship goes beyond day-to-day operations and can include strategic guidance. Mentors may help start-ups navigate challenges, make informed decisions, and align their business strategies with long-term goals. Incubation support may include assistance in refining the start-ups’ brand positioning. This involves developing a unique identity and value proposition that resonates with the target audience.” The support coming through mentorship goes beyond the competition phase and extends in the form of a long-term association with the winning brands. 

What lies ahead

In just the second edition of Beauty&You, it has scaled considerably from the first one in 2022. “Building on the success of last year’s programme, we expanded the scope and scale by increasing the award categories to invite a broader group of founders, creators and innovators. In addition, we commissioned a study to spotlight the biggest trends and most interesting insights to help entrepreneurs innovate for the future. This year’s finalists represent an incredibly diverse group of talent reflecting the beauty ecosystem—from innovative founders and R&D experts to photographers, filmmakers and experiential artists.”

Expounding how Beauty&You is committed to pursuing a well-established homegrown beauty landscape in the coming years, Randhava says, “Beauty&You will continue its endeavour to empower the beauty entrepreneur ecosystem in India with a series of masterclasses with founders and creators that are sure to offer an unmissable opportunity to learn from the experiences of these industry experts.”

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