Function of Beauty Raises $150M to Expand Customized Products
Function of Beauty is a New York-based company that focuses on creating customized beauty products for the masses. The company raised a $150 million Series B funding round in early December. The Greenwich, Connecticut-based private equity firm L Catterton, which focuses on investing in consumer brands, led the round. Existing investors CircleUp and GGV Capital also participated in this Series B round.
Function of Beauty Founded by MIT Grads
MIT-educated engineer Zahir Dossa founded the company in 2015. The company’s leadership consists of a team of MIT-trained scientists. Zahir Dossa serves as CEO, fellow MIT graduate Joshua Maciejewski is COO, and Hien Kaplan is Chief Science Officer. When Function of Beauty launched in 2015, they started with two manufacturing facilities in Pennsylvania that they built from the ground up. A year later, the brand premiered with haircare products.
Dossa founded the company with the mission of bringing customized hair, skin, and body care products to a broader audience. Dossa confessed that he actually “passionately hates the beauty industry” and was motivated to transform and disrupt the industry. Prior to founding Function of Beauty, Dossa had success in building another beauty brand, The Argan Tree. The line of argan-infused oils quickly scaled and found its way onto the shelves of grocery stores such as Whole Foods.
How it Works
The steps are simple. You start by taking a quiz to determine your individualized formula. The company emphasizes that it only uses clean ingredients—in other words no sulfates, no parabens, and 100% vegan ingredients. The company adheres to making sure its ingredients pass European Union safe cosmetics regulations and 26 checklist items. The European Union’s health hazard regulations are significantly stricter than those of the U.S. Food and Drug Administration (FDA)—as a point of comparison, the European Union bans nearly 1,400 ingredients versus only 11 by the FDA.
The quiz starts by asking customers about fragrance and color preferences for their haircare products. The quiz then moves into asking about the customer’s goals for formula performance, assessing qualities such as oil control, strengthening, frizz control, split end repair, and scalp soothing. Once you have submitted your quiz, the company determines your unique formulation with the help of its MIT-trained scientists. After Function of Beauty has completed making your customized formula, it will deliver a package to you. The price for a set of a 16-oz. shampoo and 16-oz. conditioner is $49.
Function of Beauty Means Function of YOU
A slogan displayed on the company’s website reads “There are trillions of possible formulations, but only one Function of YOU”. The brand has seen rapid growth over the past five years.
As summarized by Avik Pramanik, a partner at L Catterton, “Function of Beauty has cracked the code of mass customization and is poised to redefine the beauty landscape. We are delighted to partner with Zahir, Joshua, Hien, and the company’s passionate team to grow the brand. Together, we look forward to deploying an even more aggressive growth marketing strategy in domestic and international markets while fostering breakthrough product innovation in hair care, skincare, and more.”
Partnering with a private equity firm like L Catterton, which is particularly active in the consumer space, is a strategic win for Function of Beauty. L Catterton has invested in consumer brands globally, including a number of beauty brands such as The Honest Company, Elemis, Bliss, II Makiage, Frederic Fekkai, Nutrafol, and Tula. Luxury group LVMH Moet Hennessy Louis Vuitton founded the private equity firm in 2016. The company arose from merger between luxury goods leader LVMH and private equity firm Catterton.
Function of Beauty intends to use its newly raised Series B funds to expand product development, manufacturing capabilities, and its international presence. The company currently has a presence in 45 countries and would like to broaden its reach further internationally. Concurrently, it plans to expand its customer base in the U.S. market. In 2017, the company raised a $12 million Series A round that was led by GGV Capital. Since then, it has also secured an undisclosed amount of debt financing that has helped fuel its growth.
Social Media Influencers and Campaigns
The brand has earned the endorsement of prominent social media influencers, including Kim Kardashian. The company has deployed an aggressive Instagram marketing strategy whereby influencers provide their followers with special discount promo codes to buy products on the Function of Beauty website. Influencers such as Kim Kardashian have also posted photos of themselves using the personalized products and explaining the steps to select a unique Function of Beauty formula.
As one of the first-movers in the customizable beauty products space along with funding from prominent investors, Function of Beauty’s future outlook looks strong. “In our view, in 10 to 20 years, personalization will be the norm, not just a niche,” says Dossa. “Consumers will expect personalization because we have the technology, capacity, and means to do so. We’ve thrown down quite the gauntlet for all other companies now as they race to catch up.”