The answer I hear surprisingly often is some version of: We are high performance and clean.

Those may be positive qualities. They may even be important reasons a product works. But they do not answer my question. I did not ask about the ingredient deck, the claims language or the list of things the founder chose to formulate without. I asked how the founder views the brand, how it is positioned, what it stands for and why a consumer should feel something for it that she does not feel for the dozens of alternatives sitting beside it.

This distinction between product attributes and brand attributes sounds basic, but founders and investors regularly blur the two. In beauty, health and wellness, where efficacy matters and consumers increasingly educate themselves about ingredients, it is easy to mistake a strong formulation story for a strong brand. The two can reinforce each other, but they are not interchangeable.

At True Beauty Ventures, we care deeply about product quality. We assess efficacy, formulation, ingredients, claims, sensory experience, packaging and the ability to deliver a meaningful consumer benefit. But product quality is table stakes. It can earn a brand the right to compete. It rarely explains why that brand will build enduring loyalty, community and affinity.

That is the work of brand. Product may create the initial proof, but brand is the moat.

“A brand is a person’s gut feeling about a product, service or organization.”
Marty Neumeier, The Brand Gap

What a product does versus what a brand means

Product attributes describe the functional qualities of an offering. A serum may brighten skin, a hair mask may repair damage, a supplement may support sleep and a sunscreen may offer broad-spectrum protection without leaving a white cast. Ingredients, dosage, clinical support, texture, scent, format, ease of use and price all sit largely on the product side of the equation.

Brand attributes live at a different level. They define a worldview. They tell consumers what the company believes, whom it understands, what kind of relationship it wants to create and how participation in that world should feel. Brand attributes show up in voice, visual identity, founder behavior, product names, customer experience, community, retail presentation, collaborations and even in the ideas the company chooses not to pursue.

The distinction does not mean that function and emotion operate separately. The best brands connect them. Product truth gives the brand credibility, while brand meaning gives the product relevance. But founders need to know which job each element performs.

“Clean” illustrates the problem particularly well. Depending on the company, it can describe ingredient standards, exclusions, sourcing choices or a retailer-defined formulation policy. It may matter to the consumer, and a brand should communicate it clearly when it does. But clean has become a broad category convention claimed by most companies. It says very little about the distinct world a brand wants to build.

The same applies to “high performance.” Every serious beauty or wellness company should aspire to make products that perform. A founder telling us the brand is high performance is a little like a restaurant telling us its food tastes good. We hope so. The statement establishes a minimum expectation, not a differentiated identity.

Three brands with unmistakable north stars

We love brands with a strong, purposeful north star because that north star makes the company legible. Consumers understand it, employees can act against it and investors can see how it might expand. Three companies from the TBV portfolio, Vacation, Dieux and Crown Affair, illustrate this in very different ways. Their logos, taglines and broader creative systems are not decorative layers applied after the product is developed. They are visible expressions of the central ideas organizing each company.

“Leisure-Enhancing Sunscreen”
“The World’s Best-Smelling Sunscreen”

“Rituals, not miracles.”
Clinically vetted and price-transparent skincare

“Take your time.”
A love letter to your hair

Placed together, the contrast is useful. None of these lines leads with an ingredient. Each quickly establishes an emotional or philosophical territory, and each gives the consumer a sense of the relationship the brand wants to build.

Vacation: leisure is the product around the product

Vacation makes effective sunscreen, but SPF protection alone does not explain Vacation. The brand takes leisure as seriously as protection and has built an entire world around that idea. Its nostalgic visual language, distinctive scent, playful corporate mythology, product formats and collaborations all reinforce the same point of view. Sunscreen becomes more than a protective obligation. It becomes a sensorial ticket into a more pleasurable, escapist version of life.

That north star gives the team a filter for innovation. A whipped-cream sunscreen, a Chardonnay-inspired oil or a fragrance can all make sense because the brand does not define itself narrowly as a collection of SPF formulas. It defines itself through leisure. The products still need to work, and Vacation develops them with serious attention to modern skincare science. But efficacy supports the brand promise. It does not substitute for it.

Dieux: radical transparency with personality

Dieux also cares deeply about performance. Its products feature clinical vetting and the company has real formulation and dermatological expertise behind it. Yet the brand means more than science-backed skincare. Dieux brings transparency, education, cultural fluency and a willingness to challenge the conventions of the beauty industry. It can explain ingredients and claims without sounding sterile, and it can be funny and irreverent without undermining its credibility.

That combination matters. Plenty of skincare companies discuss actives and clinical results. Dieux has built a recognizable relationship with its consumer, one grounded in intelligence, honesty and personality. The consumer does not only trust that the products work. She trusts the brand to help her navigate a category filled with inflated claims and confusing information.

Price transparency makes this particularly tangible. Dieux does something almost no other brand is willing to do: it shows consumers how it arrives at a price. The company discloses the costs behind formulas, packaging, labor, payment processing and shipping, then explains the markup and the margin remaining for the business. It even discusses how that margin can compress to approximately 10 to 20 percent after the broader cost stack. Rather than asking the consumer to accept that a product is fairly priced, Dieux reveals the economics and lets the consumer decide.

More recently, when scale lowered the cost of Deliverance, Dieux reduced the retail price of the 30mL serum from $69 to $62 and passed some of those savings back to the consumer. It did not keep the benefit hidden inside the P&L. It acted consistently with the promise of transparency.

That is an important distinction. Transparency is not merely one of the words on a Dieux brand presentation. It is a behavior the consumer can observe. The clinical vetting supports the product. The willingness to show the economics, question industry conventions and admit the realities of making and selling skincare builds the brand. Competitors may formulate another peptide serum or barrier moisturizer. It is much harder to replicate years of accumulated trust and a community that believes the company will tell the truth. That trust is the moat.

Crown Affair: changing the relationship with hair

Crown Affair began with a belief that haircare could become an intentional ritual rather than another hurried step in a routine. Its stated ambition is to help people change their relationship with their hair, appreciate its natural beauty and care for it. That idea appears throughout the brand, from its elegant tools and formulations to its visual restraint, educational content and emphasis on ritual.

The north star creates coherence. A brush, towel, dry shampoo or styling product can all belong because each can improve the experience of caring for hair. Crown Affair does not need to chase every hair concern or trend. It can ask whether an idea deepens the ritual and supports a healthier, more considered relationship with hair. That gives the brand both permission to expand and discipline around how it expands.

These brands look and sound nothing alike, which is exactly the point. A powerful brand north star is not a template or an aesthetic treatment. It is a specific, ownable perspective that shapes the entire company.

“Products are made in the factory, but brands are created in the mind.”
Leo Burnett

Why brand matters so much to us as investors

At the earliest stages, investors rarely have enough data to prove durability. Sales can show initial demand, repeat rates can suggest satisfaction and retail productivity can reveal resonance. But we are still underwriting what the company can become. A clear brand north star helps us see the path.

First, brand creates emotional differentiation in markets where functional advantages rarely remain exclusive forever. Competitors can identify an ingredient, approximate a format, recruit a manufacturer and make similar claims. Retailers can introduce adjacent products. Trends can turn a novel attribute of yesterday into the shelf standard of tomorrow. A brand with accumulated meaning is harder to reproduce because consumers experience it as a whole, not as a formula that can be reverse engineered. Product advantages often narrow over time. Brand equity can compound.

Second, brand can improve the economics of growth. Consumers talk about brands that make them feel something. Creators want to interpret them. Editors have a story to tell. Retailers see a reason to give them space. Collaborators can imagine unexpected ways to enter their world. None of this eliminates the need for paid marketing, but it can create more organic attention, stronger conversion and deeper affinity than a list of functional claims can generate on its own.

Third, brand supports expansion. Product attributes often attach to a single SKU, while a strong north star can travel across categories, formats, channels and geographies. This does not give a company permission to launch indiscriminately. It gives the team a framework for deciding which adjacencies feel natural and which would dilute the brand. The best north stars create both possibility and constraint.

Fourth, brand can produce resilience. Products will miss. Algorithms will change. Competitors will undercut price. A favored ingredient may fall out of fashion, and a claim that once felt differentiated may become ubiquitous. When consumers have a genuine relationship with a brand, the company has more room to evolve. Loyalty transfers across products because it rests on trust and affinity, not only on one attribute.

Finally, a clear brand reveals something important about the founder. We invest early, when the brand and founder are often inseparable. A founder who can articulate a specific and purposeful north star usually shows a deeper understanding of the consumer, the culture and the white space. That clarity can guide hiring, creative, innovation, distribution and capital allocation. It helps a young company make hundreds of decisions that remain consistent even as the organization grows.

This is why we lean in much harder when a founder can explain not just what the product does, but why the brand needs to exist.

Brand is not a substitute for product

There is an important caveat. Strong branding cannot rescue a weak product indefinitely. Beautiful packaging may drive trial, a compelling founder may generate attention and a distinctive world may earn cultural relevance. But if the product disappoints, repeat purchase eventually exposes the gap. In beauty, health and wellness, the product must deliver.

The inverse is also true. A great product without a meaningful brand may build a business, particularly when it solves an acute problem or owns a protected technical advantage. But it remains more vulnerable to imitation, price competition and shifts in consumer attention. Functional superiority can be real and valuable, yet its advantage often narrows as the market catches up.

The strongest companies do not choose between product and brand. They build a product truth that supports an emotional truth. Their formulas prove the promise, while their brand gives the promise meaning. The product earns trust one use at a time. The brand gives that trust somewhere to accumulate.

The question behind the question

When I ask a founder to tell me about the brand, I am not looking for a polished mission statement or a string of fashionable adjectives. I want to understand the central idea that organizes the company. What does the brand believe that others do not? What tension in the life of its consumer does it understand? What emotional territory can it credibly own? What should remain true as the company moves from one hero product to a broader assortment, from DTC to retail and from a founder-led team to a larger organization?

The ingredient deck matters. The claims matter. The product experience matters. We will spend plenty of time assessing all of them. But those answers tell us whether the product deserves to be purchased.

The brand north star tells us whether the company deserves to endure.

How much has this brand accomplished before it needed more?

As consumer investors, we spend a lot of time evaluating growth. Revenue growth, consumer growth, retail growth and category growth all matter. But one lesson has become increasingly clear over the years. Growth and expansion are not the same thing.

When momentum begins to slow, the natural instinct is to launch another SKU, sign another retailer, enter another country or add another channel. Sometimes those are exactly the right decisions. Too often, however, they become substitutes for building a more productive business.

“Innovation is saying no to 1,000 things.”
- Steve Jobs

That quote has always resonated with me because it applies just as much to building a consumer brand as it does to designing a product. Every founder is presented with opportunities. The difficult part is not finding them. The difficult part is deciding which opportunities to pursue today and which are worth preserving for tomorrow.

At TBV, we think about productivity across three dimensions: products, distribution and geography. We are not looking for businesses with the fewest SKUs or the narrowest distribution for the sake of simplicity. We are looking for businesses that generate exceptional results from a focused assortment, a concentrated distribution strategy and a disciplined geographic footprint. Those businesses tend to require less working capital, operate more efficiently and, perhaps most importantly, preserve meaningful optionality for future growth.

Product Productivity

One of the first things we evaluate is how much revenue a brand can generate from each SKU. There is no perfect number of products that every beauty brand should have, and different categories naturally require different levels of assortment. What we consistently prefer, however, is an assortment where every product has a purpose and every launch matters.

The strongest emerging brands typically have a hero product, or a small collection of hero products, that disproportionately drive awareness, trial and repeat purchase. Consumers know exactly what the brand is famous for.

Consider two businesses each generating $20 million in revenue. One achieves that with eight SKUs. The other requires 40. The topline may be identical, but the businesses underneath look very different. The more focused business generally carries less inventory complexity, ties up less working capital, spends marketing dollars more efficiently and asks its organization to do fewer things exceptionally well.

Every additional SKU comes with a cost. It requires formulation, inventory, forecasting, packaging, merchandising, education and marketing. More assortment does not automatically create more demand. In many cases, it simply spreads existing demand across a larger number of products.

That said, context matters. Makeup is a good example. Unlike skincare, makeup naturally requires broader assortments because of shades, finishes and product formats. We would never expect a color cosmetics brand to have the same SKU count as a skincare brand simply for the sake of being “productive.”

What does not change, however, is the importance of a hero. Even within a broad makeup assortment, we still want to understand what product or franchise recruits the consumer and defines the brand. A great makeup brand may eventually have dozens of SKUs, but it should still be able to answer one simple question:

What are you famous for?

There is another reason we value focused assortments. They preserve optionality.

Newness remains one of the most powerful drivers of growth in beauty. A successful product launch can bring existing consumers back to the brand, recruit entirely new consumers, generate social conversation and give retail partners another reason to invest behind the business. When a company has maintained a disciplined assortment, each launch has the potential to materially change the trajectory of the business.

A ninth SKU can have an enormous impact when it follows eight highly productive products. The forty-first SKU rarely has the same effect.

Distribution Productivity

We think about distribution through much the same lens.

A productive DTC business is often the best predictor of a productive retail business. Direct-to-consumer allows brands to prove that consumers genuinely want the product before asking a retailer to validate the concept. It helps founders understand which products resonate, identify their hero franchise, refine their messaging and build a direct relationship with consumers.

When that foundation exists, retail becomes an accelerator rather than the source of demand.

This is one reason we generally prefer brands that demonstrate strong DTC productivity before expanding aggressively into retail. Certain categories will naturally reach retail earlier, and there are always exceptions, but in many cases the strongest retail launches occur when consumer demand already exists. Retail should amplify demand, not create the appearance of it.

Once a brand enters retail, the same philosophy continues to apply.

More doors do not necessarily create a better business. We would much rather see an emerging brand become indispensable to one anchor retail partner than spread itself across multiple retailers before it has earned that expansion.

There is tremendous strategic value in becoming important to your retail partner. Brands that generate exceptional sales productivity, recruit new consumers and create excitement receive more support, more visibility and ultimately more opportunities to grow.

Equally important, they preserve future optionality.

A brand generating meaningful revenue through Sephora, DTC and TikTok Shop still has Amazon, additional retail partners and other channels available when the time is right. A similarly sized business that has already entered every conceivable channel has fewer meaningful expansion opportunities remaining.

Geographic Productivity

The same principle applies internationally.

Every founder dreams of becoming a global brand, and they should. The mistake is believing that global success requires launching globally from day one.

Every new geography creates additional regulatory complexity, inventory requirements, marketing investments and management attention. A young company can quickly find itself operating several small businesses instead of building one great one.

We generally prefer brands to dominate their home market before expanding internationally. By doing so, they not only build a stronger operating foundation, they also preserve one of the most valuable growth opportunities available to them.

International expansion should become another chapter in the growth story, not a distraction during the opening chapter.

Productivity in Practice

I have seen this philosophy play out firsthand.

After founding True Beauty Ventures, I had the opportunity to invest in Glow Recipe through my advisory relationship with North Castle Partners. At the time, the brand looked very different than it does today. The assortment consisted of fewer than 10 SKUs, the distribution strategy centered on an exclusive partnership with Sephora, and the company remained focused on building one market before pursuing many others.

That discipline proved to be a competitive advantage.

Rather than chasing additional retailers or launching dozens of products, Glow Recipe focused on maximizing productivity within a concentrated assortment and a single anchor retail relationship. Consumers quickly understood what the brand stood for, Sephora had every reason to invest behind it and the business scaled without unnecessary complexity.

Only after establishing that foundation did Glow Recipe expand its assortment, broaden its international footprint and enter additional markets. Because those opportunities had been preserved, each product launch and each geographic expansion became another meaningful growth catalyst. Today, Glow Recipe has become one of Sephora’s leading skincare brands globally. I do not believe that happened despite its early focus. I believe it happened because of it.

That same philosophy continues to shape how we invest today.

Dieux has built impressive momentum with fewer than 8 core products, anchored by Instant Angel, a hero product that has become somewhat synonymous with the brand. Distribution remains intentionally focused through Sephora in the U.S. and Canada, its own DTC business and TikTok Shop. The brand has not expanded to Amazon, broadly entered international markets or pursued every retail opportunity available.

What excites us is not simply what Dieux has accomplished. It is what still lies ahead. There are meaningful product launches to come, additional channels that can be explored when the timing is right and international markets that remain untapped. Those are not gaps in the strategy. They are preserved opportunities that can create meaningful value over time.

Why Productivity Matters

Ultimately, productivity is about much more than efficiency.

Productive businesses generally require less working capital, less organizational complexity and less capital to reach meaningful scale. They also give founders something incredibly valuable: choice. Choice about when to raise capital, which retailers to partner with, which markets to enter and which opportunities are worth waiting for.

At True Beauty Ventures, we are not looking for brands that have already exhausted every avenue of growth. We are looking for brands that have demonstrated they can build something meaningful with remarkable focus while preserving the opportunities to become much larger over time.

The question we continue to come back to is not simply how large a brand can become. It is how much value that brand can create before it has to pull its next growth lever.

In a world that often celebrates expansion for its own sake, we believe productivity remains one of the most underappreciated competitive advantages an emerging consumer brand can have.

That is why we will continue to back founders who know how to do more with less.

For more than thirty years, I have had the privilege of investing behind some of the most successful brands in beauty and consumer products. I have spent countless hours with founders discussing positioning, differentiation, customer loyalty, and why some companies become enduring franchises while others enjoy only a brief moment in the spotlight. I thought I understood branding. What I underestimated was how different it feels when you are the one responsible for building the brand yourself.

When we launched True Beauty Ventures in 2020, we did not really have an institutional brand. My personal reputation was the brand. Founders knew me from previous chapters of my career, LPs invested based on relationships built over decades, and much of our early credibility reflected experiences that predated True Beauty Ventures. That is how many firms begin. People invest in individuals long before they invest in institutions.

Over the last six years, I have come to appreciate that building an investment firm is remarkably similar to building a consumer brand. Neither is built through one successful investment, one great fundraise, one press announcement, or one viral moment. Brands are built through consistency. They are built by showing up every day, reinforcing what you stand for, and earning trust one interaction at a time. There are no shortcuts, and there is certainly no substitute for time.

That realization changed how we approached our business. We stopped thinking about brand building as marketing and started treating it as one of our core responsibilities. Writing this Substack, publishing a monthly newsletter, actively sharing our perspectives on LinkedIn and Instagram, speaking at conferences, participating in podcasts, mentoring founders, and investing time in relationships all became part of the investment process itself. None of those activities produces an immediate return, but over time they create something much more valuable than awareness. They create trust.

One of the most important lessons I have learned is that brand is one of the few assets that compounds without ever appearing on the balance sheet. You rarely notice the progress from one month to the next, but after several years the cumulative effect becomes surprisingly powerful. Founders begin referencing articles you wrote months earlier. Journalists reach out because they know your perspective. Recruiters proactively recommend executives for your portfolio companies. Relationships develop more naturally because people already have a sense of who you are before the first conversation ever takes place.

I experienced that firsthand just a few weeks ago. I reached out on LinkedIn to the founder of a newly launched beauty brand that I thought was interesting. Five years ago, that message would have been another cold introduction asking for the opportunity to connect. Instead, the founder replied, “I am flattered you are reaching out. I have been following True Beauty Ventures and it would be great to connect.”

I have thought about that response several times since.

The message I sent was not particularly different from dozens I have written over the years. What had changed was not the outreach, it was the reputation behind it. Six years of consistently writing, investing, mentoring founders, supporting portfolio companies, and showing up in the beauty ecosystem had quietly created trust before we had ever spoken. That single sentence reminded me that brand is not measured by how many people recognize your name. It is measured by how they feel when they hear it.

Perhaps the development that gives me the greatest satisfaction has nothing to do with fundraising or investment performance. It has been watching True Beauty Ventures evolve from a firm associated primarily with my own reputation into an institution with multiple respected voices.

When we launched the firm, my personal network naturally opened many of the early doors. Today, Cristina has built an exceptional reputation of her own within the beauty, health, and wellness ecosystem. She has earned the trust of founders by being an outstanding partner, developed deep relationships with operators and executives across the industry, become an increasingly recognized voice through her own writing and speaking engagements, and consistently demonstrated the thoughtful judgment that entrepreneurs value in an investor.

What makes that so rewarding is that her reputation is entirely her own.

Every founder who recommends Cristina to another entrepreneur, every executive who enjoys working with her, every conference where she represents the firm, and every relationship she builds strengthens not only her own personal brand, but the institutional brand of True Beauty Ventures. The strongest organizations eventually become bigger than any one individual. Watching that transition take place has been one of the most gratifying parts of building this firm because it signals that we are creating something designed to endure.

The benefits of that work are beginning to show up throughout our business. Better reputation leads to better sourcing. Better sourcing creates access to founders and companies we may never have met in our earliest years. Entrepreneurs increasingly come into their first meeting already understanding our investment philosophy and how we partner with founders. Our outreach receives warmer responses, referrals come more naturally, and opportunities increasingly find their way to us. None of that replaces disciplined investing or hard work, but it unquestionably enhances both.

I genuinely believe one of the reasons Fund III has the potential to become our strongest fund is because we are finally beginning to benefit from six years of consistently investing in our brand. Better reputation leads to better access. Better access leads to better opportunities. Better opportunities should lead to better investment outcomes, which in turn further strengthen the brand. It is the same flywheel we have watched great consumer brands create for decades.

The same principle exists throughout private equity and venture capital. Firms like Blackstone, KKR, Apollo, Ares, and L Catterton did not become iconic because they grew large. They grew large because they spent decades building trusted institutions. Their names immediately communicate something to founders, management teams, investment bankers, LPs, and advisors. That trust creates a competitive advantage. Better reputation attracts better opportunities. Better opportunities produce stronger outcomes. Stronger outcomes reinforce the brand. Looking back, I realize we have quietly started building that same flywheel, albeit on a much smaller scale.

At only six years old, True Beauty Ventures remains a very young firm. We are still relatively small, and we are still writing the early chapters of our story. That makes every interaction even more important because every meeting, every investment, every founder relationship, every portfolio outcome, every article we publish, and every promise we keep contributes to the reputation we are building.

As I think about the next chapter of our firm, I believe our greatest opportunity is also our greatest challenge. Over the past six years, we have worked hard to establish a trusted brand within the beauty, health, and wellness ecosystem. We wanted founders, operators, retailers, strategic acquirers, and fellow investors to know exactly who we are, what we stand for, and how we partner with entrepreneurs. I believe we have made meaningful progress, and I also believe those efforts are beginning to compound.

Our next objective is to translate that ecosystem brand into an equally strong reputation among institutional LPs, including endowments, foundations, pensions, family offices, and professional asset allocators. That audience quite understandably evaluates firms differently. They gravitate toward organizations with long track records, institutional scale, and decades of history. As a six-year-old specialist firm focused exclusively on beauty, health, and wellness, we recognize that we still have to earn that trust.

Ironically, what some perceive as our greatest limitation is precisely what we believe is one of our greatest strengths. Deep specialization creates better sourcing, stronger pattern recognition, richer industry relationships, and insights that generalist investors simply cannot replicate. Our challenge is not changing who we are. It is demonstrating that specialization, combined with discipline, consistency, and strong investment performance, creates a durable competitive advantage.

In many ways, this feels remarkably similar to where we were when we launched True Beauty Ventures. We are once again introducing ourselves to a new audience, one relationship at a time. The difference is that today we are not starting with only a personal reputation. We have a growing institutional brand, an outstanding team, an expanding track record, founders who advocate for us, and an ecosystem that increasingly validates what we have spent six years building.

“It takes 20 years to build a reputation and five minutes to ruin it.”
Warren Buffett

That quote resonates with me even more today than it did when we launched the firm.

Whether you are building a consumer brand, an investment firm, or your own career, the strongest brands are built exactly the same way. They are built patiently. They are built consistently. They are built through thousands of interactions that reinforce trust long before the compounding becomes visible.

A brand gets you noticed. A reputation gets you invited back.

In the long run, I have come to believe that both are among the most valuable assets any business can build.

One of the first questions I ask founders when we begin discussing customer acquisition is deceptively simple: What is your blended CAC? More often than not, I receive a different answer. “Our Meta ROAS is 5x,” or “Google is delivering a 6x return.” Those are useful answers, but they are not answers to the question I asked.

Over the past decade, Return on Advertising Spend, better known as ROAS, became one of the most widely quoted metrics in consumer businesses. It was easy to calculate, easy to benchmark, and almost always looked impressive in fundraising presentations. As digital advertising became more sophisticated, founders understandably gravitated toward the metric because it provided immediate feedback on campaign performance. Today, however, I think investors have become much more disciplined in how they evaluate customer acquisition. Rather than focusing on how efficiently advertising dollars generate revenue, we spend considerably more time understanding what it truly costs to acquire a customer, how quickly that investment is recovered, and whether those customers ultimately create lasting enterprise value.

That is why I have gradually shifted my attention away from ROAS and toward metrics such as Customer Acquisition Cost (CAC), first order profitability, customer payback periods, and, when appropriate, Lifetime Value to CAC. Each tells a different story, but some stories are considerably more useful than others, particularly at the Seed and Series A stages where True Beauty Ventures spends most of its time.

ROAS Is an Excellent Marketing Metric

ROAS measures how much revenue is generated for every dollar spent on advertising. Marketing teams should absolutely monitor it because it helps optimize campaigns, compare channels, evaluate creative, and determine where incremental advertising dollars should be invested. Used correctly, it is an outstanding operating metric.

My hesitation begins when ROAS becomes the primary metric used to evaluate the health of a DTC business. ROAS measures revenue, not customer acquisition. Depending on the attribution methodology being used, it may receive credit for purchases from existing customers, branded search traffic, email campaigns, or consumers who were already familiar with the brand through retail distribution, PR, influencer activity, founder content, organic social media, or simple word of mouth. In many cases, those customers may have purchased regardless of whether the advertisement was served.

This dynamic becomes even more pronounced as brands mature. Existing customers naturally represent a larger percentage of revenue, brand awareness increases, and organic demand improves. Those are all positive developments, but they can make ROAS appear stronger without necessarily indicating that the company has become more efficient at acquiring new customers. As investors, we are trying to understand the economics of future growth, not simply explain revenue that may have occurred anyway.

For that reason, I have always viewed ROAS as an important marketing metric. I simply do not view it as the best investment metric.

CAC Answers a Better Question

Customer Acquisition Cost asks a much more direct question: What did it actually cost to acquire one new customer?

That distinction matters because future growth depends on acquiring incremental customers efficiently. Existing customers are incredibly valuable, but they represent retention rather than acquisition. When I evaluate an early stage brand, I want to understand whether the company has built a repeatable engine for bringing new consumers into the ecosystem at an attractive cost.

The formula itself is straightforward. Total customer acquisition spend is divided by the number of new customers acquired during a given period. The more interesting discussion, however, is what belongs in that acquisition spend.

The table below reflects what I would consider a relatively conservative view of CAC.

There is no universally accepted methodology for calculating CAC, and reasonable investors will disagree about whether certain expenses belong in the calculation. That is perfectly acceptable. The important point is not whether your methodology matches mine. The important point is that it is logical, transparent, and consistently applied over time. Changing the definition every quarter may improve the reported metric, but it makes trend analysis almost meaningless.

Paid CAC Versus Blended CAC

Another distinction that deserves attention is the difference between paid CAC and blended CAC.

Paid CAC measures the cost of customers acquired through paid advertising channels alone. Blended CAC measures the cost of acquiring every new customer during a period, regardless of whether they arrived through paid media, referrals, organic search, retail discovery, PR, founder content, influencer activity, or word of mouth.

I like looking at both because they answer different questions. Paid CAC tells me how efficiently the advertising engine is performing. Blended CAC tells me how efficiently the entire brand is acquiring customers. Over time, I actually expect strong brands to rely less on paid acquisition as awareness builds and organic demand becomes a larger contributor to growth. Great brands create demand. Great marketing simply accelerates it.

The Vanity Metric Trap

One of the reasons I have become increasingly cautious about relying too heavily on ROAS is that it can improve while the underlying business actually becomes weaker.

A company can narrow attribution windows, focus spending on branded search, target only the highest intent audiences, or simply benefit from a growing base of loyal customers returning to purchase again. Each of those decisions can improve reported ROAS. None necessarily improve the long-term economics of the business.

Similarly, some companies reduce investments in upper funnel marketing because those activities often depress short-term ROAS. Initially, the dashboards look better. Six or twelve months later, however, customer acquisition slows because awareness has not kept pace. This is one reason sophisticated investors rarely evaluate businesses using a single marketing metric. Looking at ROAS in isolation can create a false sense of progress.

Customer Acquisition Becomes More Difficult as Brands Scale

Another misconception I frequently encounter is the belief that CAC should remain stable over time. In reality, customer acquisition almost always becomes more expensive as brands grow. The earliest customers tend to be the easiest to reach and the most enthusiastic adopters. As those audiences become saturated, brands naturally move toward broader and less efficient customer segments.

The best management teams understand this dynamic. Rather than relying indefinitely on increasingly expensive paid acquisition, they invest in building stronger brands. Retail distribution, earned media, exceptional products, founder storytelling, organic social content, community building, and word of mouth all become increasingly important because they improve blended customer acquisition over time. Those investments may not immediately improve paid CAC, but they often create a much more durable business.

Where LTV/CAC Fits In

Lifetime Value divided by Customer Acquisition Cost has become one of the most discussed metrics in consumer investing, and for mature businesses with years of customer history, it can be an extremely valuable indicator of customer economics.

Early stage investing presents a different challenge.

At the Seed and Series A stages where we spend most of our time, lifetime value is rarely a known number. It is an estimate built upon assumptions around repeat purchasing, customer retention, purchase frequency, pricing, future competition, and marketing efficiency. Small changes to any of those assumptions can produce dramatically different lifetime value calculations.

That does not make LTV/CAC unimportant. It simply means I prefer not to rely too heavily on projections that have yet to be proven. As investors, we generally prefer metrics based upon observable facts rather than estimated outcomes. LTV/CAC absolutely has its place, but I view it as a supporting metric rather than the centerpiece of the discussion when evaluating young businesses.

“Revenue is vanity, profit is sanity, but cash is king.”
Business proverb

First Order Profitability and Payback Periods

Personally, I place more weight on first order profitability and customer payback periods than I do on projected lifetime value. They require fewer assumptions and tell me much more about how efficiently a company is deploying capital today.

While every category is different, I generally prefer customer acquisition costs that can be recovered within approximately three months. Six months can still represent a very attractive business depending on the category, customer behavior, and repeat purchasing profile. Once customer payback begins extending materially beyond six months, however, it increasingly feels like the company is buying customers rather than building a durable business.

Long payback periods consume working capital, increase financing requirements, and expose businesses to significantly more execution risk. Advertising costs rise, competitors emerge, consumer preferences change, and economic conditions evolve. The longer it takes to recover acquisition costs, the more assumptions have to remain true for the investment to ultimately succeed. Businesses that recover their acquisition costs quickly generate cash sooner, reinvest that capital more rapidly, and compound growth with considerably less dependence on outside financing.

This is one of the reasons I have become increasingly focused on first order profitability. It provides an immediate indication of whether customer acquisition is moving the business toward sustainable economics rather than relying on future purchases that may or may not materialize.

Looking at the Entire Picture

None of this should be interpreted as suggesting that ROAS is unimportant. It remains an outstanding tool for optimizing advertising campaigns and improving marketing performance. CAC provides a much clearer picture of acquisition efficiency. Blended CAC helps evaluate the strength of the brand beyond paid advertising. LTV/CAC offers insight into long-term customer economics when sufficient history exists. First order profitability and customer payback periods reveal how efficiently capital is actually being deployed.

Each metric answers a different question. The mistake is relying too heavily on any one of them.

Final Thoughts

“Risk comes from not knowing what you are doing.”
Warren Buffett

When founders proudly tell me their Meta ROAS has reached 5x, I am genuinely pleased. It usually reflects a well managed marketing program and a team that understands how to optimize digital advertising.

The conversation does not end there.

I want to understand their blended CAC. I want to know how they define it and whether that methodology has remained consistent over time. I want to understand first order profitability, customer payback periods, contribution margins, and, when the business has sufficient history, customer lifetime value.

Ultimately, we are not investing in advertising campaigns. We are investing in businesses that can acquire customers efficiently, recover those investments quickly, generate repeat purchasing, and build increasingly durable economics over time.

For early stage consumer companies, that is what creates enduring enterprise value. It is also why, when evaluating customer acquisition, I have found myself spending less time discussing ROAS and considerably more time understanding everything that comes after it.

Most assume the answer lies in revenue growth, adding retailers, or finding the right investment banker at the right moment. Those things certainly matter, but they are rarely what separates a good acquisition from a great one.

After spending more than thirty years investing in consumer businesses and sitting through countless acquisition processes, I have come to believe that the best exits are not created during the sale process. They are built years beforehand. Every product launch, every executive hire, every retailer added, every operational improvement, and every strategic decision either strengthens or weakens the eventual investment case. By the time a company formally explores a sale, most of the characteristics that determine valuation have already been established.

I recently reviewed a strategic readiness framework developed by the Raymond James Consumer team and presented at our Brand Founder Summit that closely mirrors many of the characteristics we have observed across successful beauty, health and wellness transactions over the years. What I liked most about the framework is that it shifts the conversation away from valuation and toward value creation. Strategic buyers are not simply asking whether a business has performed well. They are trying to determine whether it can become significantly more valuable after they acquire it.

Ultimately, every diligence process comes down to a handful of fundamental questions.

Does Your Brand Deserve to Exist?

Every successful acquisition begins with a differentiated brand, not simply a collection of products.

Strategic buyers want to understand why consumers choose your brand over dozens of alternatives and whether they will continue doing so ten years from now. They are looking for a clear point of view, a well-defined customer, meaningful brand equity, and evidence that the business is creating lasting relevance rather than benefiting from a temporary trend. The strongest brands are not merely taking share from competitors. They are often expanding the category itself by introducing new consumers, new routines, or new ways of thinking.

This is where founders should ask themselves a difficult question. If your brand disappeared tomorrow, would consumers genuinely miss it? If the answer is unclear, a buyer will likely reach the same conclusion.

Can This Business Scale Profitably?

Growth gets buyers interested. The quality of that growth determines how much they are willing to pay.

Sophisticated acquirers spend enormous amounts of time evaluating customer acquisition costs, repeat purchasing behavior, retention rates, gross margins, contribution margins, profitability by channel, and the overall quality of earnings. They want confidence that incremental revenue becomes more profitable as the business grows, not less. They also want to understand whether each distribution channel, whether DTC, Amazon or wholesale, creates value on a fully allocated basis rather than simply generating top line revenue.

Revenue growth is exciting. Predictable, profitable growth is valuable. Companies that consistently improve their economics while scaling give buyers confidence that the next stage of growth will create operating leverage rather than expose weaknesses in the business model.

Will Growth Continue After We Acquire It?

That simple statement explains why buyers spend so much time evaluating what comes next rather than celebrating what has already been accomplished.

Most premium acquisitions are built around one or two iconic hero products that establish credibility with consumers and retailers alike. From there, thoughtful innovation expands the franchise without diluting what made the brand successful in the first place. Buyers want to see evidence that new launches generate incremental growth rather than simply shifting revenue between existing SKUs.

Beyond innovation, they are evaluating how many additional avenues of growth remain. Can the brand expand into new retail partners? Is Amazon underpenetrated? Does international expansion represent a meaningful opportunity? Can the brand credibly enter adjacent categories? The more opportunities that remain available, the easier it becomes for a buyer to justify paying a premium valuation.

The best acquisition candidates have already proven they can win, while still leaving meaningful upside for the next owner.

Is the Organization Ready for the Next Chapter?

“Culture eats strategy for breakfast.”

Founders naturally spend enormous amounts of time thinking about products, marketing, and growth. Strategic buyers spend just as much time evaluating the people who will be responsible for the business after the transaction closes.

A company becomes substantially more valuable when success no longer depends on one individual (especially a founder!). Buyers want to see a management team capable of scaling the organization through its next phase of growth, with experienced leaders across finance, operations, supply chain, commercial strategy, product development, marketing, and people management. They also want confidence that those individuals will remain after the acquisition, which is why executive retention plans frequently become an important part of a transaction.

This becomes particularly important if the founder expects to reduce their involvement following a sale. If a CEO transition is contemplated, that leader ideally should already have been in place long enough to establish credibility, build the organization, and demonstrate results before the company enters a sale process. Leadership transitions immediately before a transaction almost always introduce unnecessary uncertainty.

Strategic buyers are not simply buying products. They are buying an organization capable of sustaining and accelerating growth.

What Could Prevent This Business From Reaching Its Potential?

Very few acquisitions fall apart because of one catastrophic issue.

More often, buyers begin accumulating concerns during diligence. Perhaps financial reporting lacks sophistication or the company has never completed a quality of earnings review. Intellectual property may not be fully protected, key trademarks may still be outstanding, or supplier agreements may leave the business overly dependent on a single manufacturing partner. Sometimes one retailer or one SKU represents an outsized percentage of revenue, creating concentration risk that becomes difficult to ignore.

In beauty, one issue that receives increasing attention is ownership of the underlying formulas. Many founders assume that because they developed the brand, they also own the formulations. That is not always the case. If a contract manufacturer or formulation laboratory retains ownership, or if ownership rights are ambiguous, buyers may question whether one of the company’s most valuable assets is actually transferable. A brand’s intellectual property extends well beyond its trademarks, and ensuring clear ownership of formulations, patents, proprietary technology, and other product-related assets can eliminate significant diligence concerns.

Founders should also pay close attention to the agreements they sign as the business grows. Distribution agreements, licensing arrangements, influencer partnerships, commercial leases, debt facilities, investor documents, and even certain employment agreements can contain change of control provisions that are triggered by a sale of the company. Some simply require notice or consent. Others contain punitive economics, accelerated payments, consent rights, termination provisions, or other restrictions that can create unexpected liabilities or reduce flexibility during an acquisition process. These provisions are often negotiated years before a sale is ever contemplated, but they can materially complicate a transaction if they are not identified and addressed early.

Other landmines are less obvious but equally important. Regulatory compliance may not have kept pace with growth. Operational processes may exist only inside the founder’s head. Financial systems may not be capable of supporting a larger organization. Customer acquisition costs may be increasing while repeat purchasing quietly deteriorates. Key executives may have no long-term retention incentives, or critical supplier relationships may remain undocumented or overly concentrated.

None of these issues necessarily kill a transaction on their own. Collectively, however, they change the conversation.

Instead of discussing the upside, buyers begin discussing the work required after closing. Instead of paying for growth, they begin discounting for risk. Every unanswered diligence question creates uncertainty, and uncertainty almost always finds its way into valuation.

The strongest companies identify and remove these landmines years before they ever hire an investment banker. In many cases, doing so not only improves the likelihood of a successful transaction, it also results in a stronger, more resilient business long before an acquisition is ever contemplated.

Is This the Right Time to Sell?

One of the more interesting aspects of the Raymond James framework is the recognition that every business has an optimal window for an acquisition.

Sell too early and buyers may struggle to underwrite enough proof points around product-market fit, omnichannel success, innovation, international expansion, or organizational maturity. Wait too long and much of the future upside has already been realized, leaving fewer opportunities for the buyer to create value.

The strongest outcomes often occur somewhere in between. The company has demonstrated consistent execution across multiple years, established strong relationships with key retailers, built a repeatable innovation engine, assembled a leadership team capable of operating independently, and perhaps even shown early proof that the brand can travel internationally or across new categories. At the same time, there remains enough untapped opportunity that buyers can envision creating substantially more value after the acquisition than before it.

That balance is where premium valuations are often created.

Build the Business, Not the Exit

One of the great ironies of M&A is that founders who spend all of their time trying to become acquisition-ready often miss the point.

The goal is not to build a company that looks attractive during diligence. The goal is to build a company that becomes stronger every year, regardless of whether a sale ever occurs.

Brand equity takes years to establish. Customer loyalty takes years to earn. Leadership teams take years to develop. Operational excellence takes years to institutionalize. None of those things can be created in the final six months before launching a sale process.

Perhaps this is one of the most underappreciated roles of a good board and long-term investment partner, identifying these opportunities and eliminating these landmines years before a transaction is ever contemplated.

The founders who achieve exceptional outcomes are usually not optimizing for an exit. They are building enduring companies that become increasingly difficult for strategic buyers to ignore. The acquisition simply becomes the natural consequence of having done all of those things well.

The best acquisition processes are often the most uneventful. That is because the difficult work was done years earlier, long before diligence ever began.

When founders focus on building an exceptional business rather than an exceptional exit, they often end up achieving both.

The Questions Every Strategic Buyer Is Asking

Whenever I evaluate an acquisition opportunity, I find myself returning to the same five questions:

• Why does this brand deserve to exist?

• Will consumers care even more about this brand five years from now than they do today?

• Does this management team have the capability to build a business several times larger than it is today?

• If we owned this company tomorrow, where would the next wave of growth come from?

• What risks would keep us awake at night after we closed the transaction?

Founders who can answer those questions thoughtfully are often much closer to building an exceptional business than they realize.

The founders who build the best businesses rarely have to chase buyers. Buyers end up chasing them.

When founders focus on building an exceptional business rather than an exceptional exit, they often end up achieving both.

Credit to the Raymond James Consumer team for developing the strategic readiness framework that inspired many of the themes discussed in this article. Their work closely aligns with many of the characteristics we have also observed across successful beauty, health and wellness transactions over the past three decades.

If you enjoyed this piece, please consider subscribing to Notes from a Beauty Deal Junkie, where I share lessons from more than three decades investing in and building beauty, health and wellness brands. My goal is simple: help founders build better businesses, make better decisions, and ultimately create more valuable companies.

Several months ago, I wrote a post titled The Small Fund Conundrum, where I discussed one of venture capital’s stranger realities: raising a smaller fund is often harder than raising a larger one.

Institutional investors frequently tell emerging managers they want focused strategies, differentiated expertise and disciplined fund sizes. Yet many of those same investors ultimately allocate capital to larger funds, broader mandates and established franchises. The result is a paradox where smaller funds often face a more difficult fundraising environment despite the fact that many investors claim to value the characteristics that smaller funds provide.

At True Beauty Ventures, we have managed to compound that challenge.

Not only are we raising a relatively small fund by venture standards, but we have layered a highly specialized investment focus on top of it. We invest exclusively in beauty, health and wellness. To some prospective investors, that combination can feel almost impossible from a fundraising perspective. Small fund. Narrow mandate. Highly concentrated expertise.

On the surface, it sounds limiting. The funny thing is that the exact opposite is true.

Beauty and personal care now represent a global market exceeding $650 billion. The wellness economy has grown to more than $6 trillion and continues to expand into categories such as sleep, women’s health, longevity, preventative care, functional nutrition and mental wellness. At the same time, the convergence between beauty, health and wellness continues to accelerate as consumers increasingly seek solutions that address appearance, wellbeing and health simultaneously.

Far from becoming smaller, our investment universe continues to expand. Yet the fundraising question persists.

“Isn’t that too narrow?”

The question is understandable, but I have increasingly come to believe it is the wrong question. The real question is whether true sector specialization creates an advantage. In our experience, the answer is unequivocally yes.

The greatest benefit of specialization is not access. It is context.

One observation I often make is that for every 100 brands we evaluate in a category, roughly 97 or 98 sound remarkably similar. They may have different branding, different formulations or slightly different founder stories, but the underlying proposition is often largely the same. Then there are the two or three that immediately stand apart. Those are the companies where the positioning feels different, the consumer insight feels sharper, the product feels more innovative or the founder sees the world in a unique way.

Those are the opportunities that get us excited.

The challenge is that if you are not seeing the first 100 opportunities, it becomes much harder to identify the two or three that truly matter. More importantly, you may never encounter them in the first place. That is where specialization becomes powerful.

“For every 100 brands we see, 97 or 98 sound the same. Our job is to find the two or three that do not.”

When you spend every day immersed in a single ecosystem, you begin to develop pattern recognition that is difficult to replicate. You understand what has worked before, what has failed before and, most importantly, why. You begin to recognize trends before they become obvious. You understand the founders, operators, retailers, manufacturers and service providers that shape the industry. Most importantly, you develop the context necessary to determine whether something is simply good or truly differentiated.

One recent example for us was Sleep or Die.

The sleep category is hardly new. By the time we encountered the company, we had evaluated a number of sleep brands, sleep supplements and wellness concepts focused on the same consumer need. Yet within minutes of seeing Sleep or Die, we knew something was different.

The branding was disruptive. The packaging immediately stood apart. The delivery format felt fresh. Most importantly, the company’s singular focus on solving one problem, helping people sleep, created a level of clarity that immediately resonated.

What made the opportunity obvious was not that we had never seen a sleep brand before. What made it obvious was that we had seen so many.

“The opportunity was not obvious because we had never seen a sleep brand. The opportunity was obvious because we had seen so many of them.”

This same dynamic has shaped our evolution into wellness investing more broadly.

While beauty has been our core focus for years, wellness required us to develop a new set of reps. We intentionally moved slowly. We wanted to evaluate hundreds of businesses, understand the competitive landscape and develop conviction around what differentiated companies actually looked like. Over time, the signal became easier to separate from the noise. We gained a better understanding of where sustainable consumer demand existed and where categories were becoming overcrowded.

Ironically, that process has also changed what excites us most. Some of the opportunities we find most compelling today have not even launched yet.

That may sound counterintuitive, but after evaluating thousands of brands, we have become increasingly interested in backing founders before the market becomes crowded. Many existing categories contain dozens of companies making similar claims, utilizing similar ingredients, employing similar marketing strategies and pursuing similar distribution channels. Increasingly, we are less interested in being the tenth investor behind a business that looks like everything else in the category and more interested in finding the founder who sees whitespace before everyone else.

This is another benefit of specialization. The more complete your understanding of a category becomes, the easier it is to recognize what is missing. It is also why we believe some of the most exciting opportunities in beauty, health and wellness have yet to be launched.

What I find particularly interesting is that while some investors continue to question the value of specialization, the broader industry seems to embrace it every day.

If specialization were not valuable, why are we regularly asked to participate in industry conferences, webinars and podcasts focused on beauty, health and wellness? Why do journalists consistently seek our perspective on emerging trends, category evolution and brand building? Why have we built one of the industry’s most active mentorship programs dedicated specifically to beauty and wellness founders?

The answer is not because we have a broader perspective than everyone else. The answer is because we have a deeper one.

Specialization creates context. Context creates pattern recognition. Pattern recognition creates conviction. Conviction ultimately leads to better investment decisions.

“Breadth of mandate and breadth of opportunity are not the same thing.”

That is why I have increasingly come to believe that specialization is not a limitation, it is a competitive advantage. The broader a mandate becomes, the harder it can be to develop the depth of knowledge necessary to consistently identify true outliers. The specialist’s advantage is not that they see fewer opportunities. It is that they see more of the opportunities that matter.

As we have begun fundraising for Fund III, we have been encouraged by the early momentum we are seeing from both existing and prospective investors. While beauty, health and wellness may continue to be viewed by some as a narrow strategy, we are increasingly finding investors who understand that specialization is not a constraint. It is an edge.

Hopefully the tide is beginning to turn.

Investors are starting to recognize that the most valuable expertise often comes not from covering everything, but from knowing one ecosystem exceptionally well. They are beginning to appreciate that in sectors as large, dynamic and interconnected as beauty, health and wellness, depth can be more valuable than breadth.

We often joke that beauty, health and wellness is a narrow mandate. The truth is that it is so expansive that we can spend every waking hour focused on it and still feel like we are only scratching the surface. And that is precisely why we remain so excited about the opportunities that lie ahead.

I recently read Vincenzo Carrara’s excellent article, The Deal Machine: Understanding M&A in Beauty and Wellness, which draws on nearly 1,300 transactions since 2010. The article makes a compelling point that beauty and wellness M&A is not slowing down, it is broadening. For earlier-stage investors like us at True Beauty Ventures, that matters because M&A trends do not just tell us what is selling today. They signal what sophisticated buyers will value tomorrow.

As we often say at TBV, “the best exits are not created during a sale process. They are created years earlier through disciplined company building.” Carrara’s analysis reinforces this view and highlights an increasingly important reality: what buyers are valuing today sits at the intersection of beauty, wellness, and consumer health.

The scale of this opportunity is difficult to ignore. McKinsey estimates the global beauty market at roughly $450 billion, while the broader wellness market now exceeds $2 trillion globally. More importantly, these are no longer distinct consumer ecosystems. Consumers increasingly think holistically about self-care. Better sleep, digestive health, hormonal balance, emotional wellbeing, and confidence now sit within the same purchasing framework as skincare, haircare, and personal care.

This convergence is changing M&A. Historically, the most obvious buyers for beauty brands were the major beauty conglomerates. L’Oréal, Estée Lauder, Shiseido, Coty, Puig, Unilever, P&G, and other strategics built portfolios through category expertise, global distribution, and brand-building capability.

Historically, beauty exits were dominated by a relatively narrow strategic buyer set. The large beauty conglomerates defined the market, with occasional participation from select financial sponsors. Over the past decade, however, that landscape has evolved considerably. Consumer private equity became increasingly active, family offices entered the category, and founder-led strategic platforms emerged as acquirers. More recently, we have seen large-scale consumer companies expand aggressively into wellness-adjacent categories that would once have sat well outside traditional beauty M&A.

That buyer universe still matters. It may matter more than ever. But it is no longer the whole story.

Recent deals make this trend clear. P&G’s acquisition of Wonderbelly reflects growing strategic interest in modern digestive wellness, while Unilever’s acquisition of Grüns highlights increasing conviction around functional supplements and daily health rituals. These are not simply supplement transactions. They are evidence that large-scale consumer buyers increasingly view wellness as a natural extension of beauty and personal care.

For earlier-stage investors, this widening buyer universe materially expands potential exit pathways. Categories that may once have appeared niche can now support much broader strategic relevance. This is one reason we spend so much time at TBV looking for opportunities where consumer behavior is evolving faster than incumbents can adapt. Often these opportunities emerge in overlooked categories where the consumer problem is significant, the legacy experience is outdated, and the white space for innovation is substantial.

When viewed through the lens of convergence, these categories often represent far larger opportunity sets than traditional classification systems would suggest.

This is why earlier-stage investors cannot simply ask whether a brand fits neatly into “beauty” or “wellness.” The better question is whether the brand owns a consumer problem, ritual, or behavior that can support durable growth and attract multiple types of buyers over time.

The aisle where a brand launches no longer defines where it can ultimately exit. A sleep brand may attract wellness acquirers, supplement companies, or personal care conglomerates. A supplement platform may now attract the same caliber of strategic interest once reserved primarily for prestige beauty.

As we often tell founders, “Fast growth creates attention. Durable growth creates enterprise value.” The next generation of category-defining brands will not necessarily be the loudest or the fastest-growing. They will be the most defensible, combining sharp positioning, operational rigor, product credibility, and deep consumer relevance.

Carrara’s analysis reinforces something we think about constantly at TBV. The beauty deal machine is not just accelerating, it is evolving. For earlier-stage investors, that evolution creates a larger opportunity set, but only for those who understand where the market is heading.

The next decade of beauty and wellness M&A will almost certainly look very different from the last. The buyer universe will be broader, diligence standards will be tougher, and the winning brands will increasingly sit at the intersection of beauty, wellness, and health. The most compelling opportunities will belong to founders building with long-term strategic relevance in mind from day one.

That is exactly the lens we bring to every investment decision at True Beauty Ventures.

Credit to Vincenzo Carrara and the Carrara Advisory team for an excellent analysis and an important reminder that the future of beauty M&A is becoming much bigger than beauty itself.

The most meaningful thing someone can say to me is simple: “TBV has a great reputation.”

Not because it is flattering, but because of what sits underneath those words. It means founders trust us. It means teams feel respected. It means people believe we try to do the right thing, even when it is difficult or economically inconvenient. In a relationship-driven industry like beauty and wellness, that matters enormously.

I have now spent more than 30 years investing, and if I am being honest, maintaining a reputation that people respect is probably the thing I am most proud of professionally. Not a specific exit, not fund size, not marks on paper. Trust. But trust is not something you achieve once and keep forever. It has to be earned continuously through actions, decisions, and consistency over long periods of time.

Very early in my career at North Castle Partners, I learned a principle from founder Chip Baird that has stayed with me ever since: value and values are inseparable. You can create economic value without strong values for a period of time, but eventually the absence of trust and integrity catches up to individuals and organizations alike. Enduring businesses and partnerships are built when both exist together.

That philosophy shaped the way I have tried to operate throughout my career. It taught me that how you win matters just as much as winning itself. Sometimes doing the right thing requires sacrificing economics, walking away from opportunities, or making decisions that are harder in the short term but correct in the long term. Those moments are when values are actually tested.

Over my career, I have witnessed several examples that reinforced this belief. I have seen a highly successful CEO removed from a business despite delivering strong operating results because ethical concerns began to emerge. Financially, keeping that individual may have been the easier near-term decision, but leadership ultimately concluded that compromising integrity would create far greater long-term damage to the organization and its culture.

I have also seen sale processes where the highest bidder was not selected because another buyer was viewed as a significantly better cultural fit for the company and more likely to position the brand and team for long-term success after closing. Walking away from a higher purchase price is never easy in a financially driven industry, but moments like that reveal what people truly prioritize.

In another situation, I watched leadership create a substantial transaction bonus pool to reward employees who helped build a successful outcome, even though those individuals did not directly participate in the equity upside. That decision reduced proceeds to investors, but it reinforced loyalty, fairness, and the recognition that value creation is rarely driven by only a handful of people around the table.

Those experiences stayed with me because they demonstrated something important: values only matter if you are willing to uphold them when there is an actual cost attached. Anyone can talk about integrity when circumstances are easy. The true measure comes when doing the right thing requires sacrifice.

At True Beauty Ventures, this philosophy is deeply embedded into how we operate. As a sector-specialized fund focused on beauty and wellness, and increasingly broader consumer health, our reputation is one of our most important assets. Founders speak with each other constantly. Executives move between brands. Operators, retailers, bankers, and investors all exchange perspectives behind the scenes. Your reputation ultimately becomes part of your sourcing engine, recruiting advantage, and ability to attract exceptional founders and partners.

That is why culture and integrity are not side conversations at TBV. They are central to how we build the firm. We hire through this lens across every part of the organization, including our operating platform partner group. We want people around the table who share the belief that relationships matter, trust matters, and long-term reputation matters. Our operating partners are aligned not only economically, but philosophically. We all understand that the goal is not simply to optimize the next transaction. The goal is to build something respected, trusted, and enduring over decades.

Ironically, I also believe this creates better long-term economic outcomes. The best founders increasingly optimize for quality of partner, not simply highest valuation. They remember who behaved well when businesses faced turbulence, growth slowed, financing markets tightened, or difficult decisions had to be made. In venture investing, reputations are often built far more during adversity than during periods of success.

Warren Buffett famously said, “It takes 20 years to build a reputation and five minutes to ruin it.” Charlie Munger similarly noted that “reputation and integrity are your most valuable assets.” Those observations resonate with me because I have seen how true they are over time. Reputations are not built quickly, and they certainly are not maintained accidentally. They require discipline, consistency, humility, and constant reinforcement.

One of the things that has made me proudest over the last several years is seeing my co-founder, Cristina Nuñez, carry this same torch forward at TBV. Culture only becomes real when leadership reinforces it consistently through actions and behavior. Watching people at industry events approach us and speak positively about TBV as people and partners means more to me than they probably realize because it reflects years of intentional effort and shared values.

The moment anyone believes their reputation is permanent is usually the moment they begin risking it. That is why I never take it for granted. Every founder interaction matters. Every board conversation matters. Every difficult decision matters. Over long periods of time, reputation becomes destiny.

In investing,

capital compounds. But so does character.

When we started True Beauty Ventures, one of the most common reactions we heard was that our strategy was too narrow. Too niche, too constrained, not enough shots on goal. In some cases, that feedback translated into a pass.

Six years in, it is clear that framing missed the point.

Focus, when done right, does not limit what you see, it expands it. It creates depth, repetition, and ultimately clarity. That realization sits at the core of why we are launching Fund III.

Narrow from the outside, scale on the inside

What looks narrow from the outside has created real scale on the inside.

Six years of category focus has given us strong deal flow, real time portfolio benchmarking, and deep relationships across founders, operators, retailers, and strategics. We are not occasional participants in this ecosystem, we live and breathe it every day, seeing a high volume of opportunities across the category.

Over time, that repetition does something important. Most opportunities begin to look and sound the same. The same positioning, the same claims, the same growth narratives.

Call it 95 percent. That is not a negative, it is the filter.

We do not win by seeing more. We win by recognizing what is actually different.

Once you have seen enough of the same, what is different stands out quickly. That kind of pattern recognition is a direct function of focus, and very difficult to replicate without it.

The categories are converging, and the exit environment reflects it

At the same time, the categories themselves are evolving. The lines between beauty, health, and wellness are fading quickly, both from a consumer perspective and increasingly from an exit perspective.

Consumers are not shopping categories, they are shopping outcomes, looking better, feeling better, aging better. The brands that win reflect that.

Strategics are behaving the same way. The acquisition of Grüns by Unilever is one example of a broader trend, where demand from large buyers continues to meet venture backed growth in adjacent categories.

Beauty, health, and wellness are no longer separate lanes. They are one expanding highway.

For us, this is not a change in direction, it is a natural extension of how we have always viewed the space.

Building a firm is not that different from building a brand

One of the more humbling lessons along the way has been around brand building.

I went into this thinking that a personal brand built over decades would translate quickly into an institutional one. It does not work that way. Institutional brands are built through consistency, through an amazing team and co-founder, and through repeated interactions over time.

Six years in, we are now seeing the benefit of that work in a meaningful way. Founders come to us earlier, our reputation drives consistent, high quality inbound, and our relationships across the ecosystem reinforce our position in the category.

Brands compound slowly, and then all at once.

That is as true for venture firms as it is for the companies we invest in.

Outcomes matter, especially in this environment

None of this matters if it does not translate into outcomes.

Our early investment in K18 Hair generated a 7.5x MOIC in less than four years. Our partial sale of Vacation Inc. returned meaningful capital to investors while allowing us to retain significant upside.

Fund I has now returned over 80 percent of called capital, a level of DPI that we believe is differentiated in today’s environment.

DPI is no longer a nice to have. It is a differentiator.

What stood out in the Vacation process was not just the outcome, but the level of demand. A number of well known consumer focused private equity firms leaned in aggressively, creating a competitive process driven by scale and check size.

That dynamic reinforced something we have believed for a long time.

The most competitive part of the market is not where we play.

At the larger end, capital is abundant and competition is intense. At the earlier stages, where we invest, that dynamic does not exist. Our ability to write smaller checks early allows us to partner with brands before they are obvious, before processes form, and before capital becomes commoditized. In many ways, it allows us to front run the same firms that show up later.

From access to infrastructure

Underpinning all of this is what we have spent the past six years building.

Our sector focus gives us early access to what we believe are the highest quality opportunities. Our reputation allows us to convert those opportunities into investments, even in competitive situations. Our portfolio creates a flywheel, strengthening our brand and sharpening our decision making through real time benchmarking.

This is what an “unfair advantage” actually looks like in practice.

We have also built an institutional platform around the areas that matter most at our stage, including HR and talent, Amazon, supply chain and operations, and retail and brand strategy. These are not passive advisors, they are aligned partners, compensated through carried interest in our funds.

Alignment drives behavior. We have structured our platform with that in mind.

We continue to build here and are now looking to add platform partners in areas like TikTok Shop and DTC growth, where the landscape is evolving quickly. The goal is not to be everything, it is to be genuinely useful where it matters most.

Why this moment

The current environment makes this approach even more relevant.

Capital has pulled back at the early stage, valuations are more rational, and founders are increasingly focused on building durable businesses. At the same time, strategic demand remains strong, particularly as category lines continue to blur.

The combination of better entry points and sustained exit demand does not show up often.

We believe this is one of those moments.

We are not a startup anymore

As we launch Fund III, one thing is clear.

We are no longer a first time fund. The risks associated with building the platform, establishing our brand, and proving the strategy are largely behind us.

Fund III benefits from six years of learnings, a more concentrated approach, better reserve planning, and a more refined operating model from day one.

This is not about starting over. It is about executing with greater precision.

Expanding the partnership

We are also thoughtful about who we partner with as we raise Fund III.

We expect to expand our base of institutional LPs, particularly family offices that understand the value of specialization and long term investing. At the same time, we will continue to bring in successful beauty founders and operators into our investor base.

The strength of our brand is not just what we invest in, it is who we invest alongside.

They bring perspective, credibility, and pattern recognition that reinforce what we are building.

The takeaway

If there is one thing we have learned, it is that focus is not a constraint, it is a multiplier. What appears narrow from the outside often provides a broader and clearer view from the inside.

Beauty, health, and wellness will continue to converge, and the next generation of enduring brands will be built at that intersection.

We plan to keep spending our time there and that is the foundation for Fund III.

The narrative writes itself. Faster is better. Scale quickly, exit quickly. But I think we are asking the wrong question.

It is not how fast these brands are growing. It is whether that growth is actually believable to an acquirer. Because in today’s market, speed alone does not de-risk an outcome. In many cases, it introduces a different kind of risk altogether.

The Shift: From Velocity to Durability

For years, growth velocity served as a proxy for quality. If a brand was growing quickly, it signaled product market fit, cultural relevance, and momentum. That was often enough to command premium valuations.

That relationship has changed.

Today, growth without context can raise as many questions as it answers. What we are seeing now is a clear divergence between growth that is durable and growth that is manufactured.

Both paths can generate impressive revenue numbers, but only one consistently holds up under scrutiny.

You can grow quickly through paid media, marketplace arbitrage, or aggressive wholesale expansion. But if that growth is not supported by repeat behavior, brand equity, and sound unit economics, it tends to get exposed in diligence. As I often say, “stage is not the risk, ignorance is,” and nowhere is that more evident than in how growth is built.

Virality: A Blessing and a Curse

Part of what is driving this moment is the compression of time.

Platforms today can take a brand from launch to scale at unprecedented speed. Virality can drive awareness and trial almost overnight, creating the illusion of inevitability. But virality is not the same as durability.

It is a powerful accelerant, but it is also a double edged sword. It can generate demand quickly, but it does not guarantee retention, and it does not always translate into a brand that endures. In some cases, it can actually mask underlying weaknesses, pulling forward demand without building the foundation needed to sustain it.

This is where many brands get into trouble. They confuse attention with traction, and traction with repeat.

The Acquirer Lens

Strategic buyers are not purchasing your last twelve months of revenue. They are underwriting what the business looks like after they own it.

That leads to a different set of questions. What happens when marketing spend normalizes? How much demand is truly organic? Are customers coming back, or constantly being reacquired? Are margins structurally sound, or a function of mix and timing?

A $300 million brand with low or negative EBITDA is simply not the same asset as a $300 million brand with strong EBITDA margins and repeat behavior. Increasingly, buyers are treating that distinction with discipline. By example, Rhode and Touchland each had EBITDA margins in excess of 40%.

This is why rapid scaling can introduce risk. We see it in channel concentration, in marketing mixes that rely too heavily on paid spend, in operational strain, and in cohort behavior that weakens as the customer base broadens. Brands can scale into a set of issues that only become visible when someone looks closely, and acquirers always look closely.

When Speed Works

None of this is to say that fast growth is inherently problematic. Some of the best outcomes combine speed with true durability.

The sale of K18 Hair to Unilever is a good example. The brand scaled quickly, but that growth was anchored in something much deeper than momentum alone. Its proprietary biotech and clinically backed efficacy created real product differentiation, but just as importantly, the brand built credibility through a strong community of professional hairstylists who believed in the product and advocated for it.

That credibility showed up in the market. Consumer and stylist testimonials reinforced product efficacy, and the strength of the hero product, the leave in molecular repair hair mask, drove both trial and repeat at scale. What started as excitement translated into sustained demand.

That combination is what gives an acquirer confidence. It signals that the brand is not just a moment in time, but a platform that can continue to compound.

A More Enduring Principle

In many ways, this moment brings us back to a more timeless idea. Slow and steady still wins the race.

That does not mean growing slowly. It means building in a way where your product, your brand, and your economics keep pace with your revenue. It means ensuring that as you scale, you are reinforcing the very things that will sustain that scale.

Fast growth can open doors. It can create momentum and attract capital. But it is the underlying fundamentals that determine whether that momentum holds.

Where Value Will Accrue

We are entering a phase where the market is starting to separate brands that can grow fast from brands that deserve to be large. Those are not always the same companies.

The next generation of enduring brands will not just be the ones that capture attention quickly. They will be the ones that convert that attention into loyalty, into repeat, and ultimately into profitability. They will be the brands where growth, margins, and brand equity show up at the same time.

Because in the end, acquirers do not pay for speed. They pay for what they believe will last.

And in today’s market, believable growth is not just more valuable than fast growth. It is the only kind that gets rewarded.

At True Beauty Ventures, we have built a thesis around what we call legacy category disruption. The idea is simple, even if the execution is not. Focus on large, established consumer categories dominated by slow moving incumbents, where innovation has stalled and the consumer experience has not kept pace with modern expectations.

These are not emerging categories. They are categories that millions of consumers already participate in, often daily. And in many cases, they have not meaningfully evolved in decades.

That is where the opportunity lies.

The Setup: Big Categories, Stale Brands

To understand why this works, you have to start with the scale.

Take anti dandruff.

This is a global market approaching $7B today and projected to more than double over the next decade. North America alone represents a significant portion of that demand. Yet the shelf is still dominated by the same legacy players, Head and Shoulders, Nizoral and Selsun Blue. These products are effective, but they are positioned as medicated solutions. Functional. Clinical. Something you tolerate, not something you enjoy.

Allergy care is even more telling.

Nearly two thirds of U.S. households purchase allergy medication, often multiple times per year. It is a highly habitual category dominated by Zyrtec, Claritin, Allegra, and Flonase. But more than 70 percent of consumers believe brand name and private label options offer the same quality.

That is not just commoditization. That is a breakdown in brand equity.

When consumers see no meaningful difference between your product and a store brand in a multi billion dollar category, you have created an opening for a new kind of brand to emerge.

Hemorrhoid care follows the same pattern.

A roughly $1B global category, growing steadily, yet still dominated by the “yellow brand”, Preparation H. The condition is common, but the category is stigmatized. The branding reinforces that discomfort. Despite affecting a large percentage of adults, no one has attempted to modernize the experience in a way that feels human or relatable.

And then there is sunscreen.

A $2B+ U.S. category that, until recently, was treated as a commodity. Coppertone, Hawaiian Tropic, Banana Boat, Neutrogena and Sun Bum. Functional products with little emotional connection.

Across all of these categories, the same pattern emerges. They are large. They are habitual. They are dominated by multinational incumbents. And they have seen little meaningful brand innovation.

Most importantly, the consumer has evolved. The shelf has not.

The Disruptors: Modern Brands, Massive Categories

This is where our portfolio comes in.

Jupiter approached anti dandruff from a completely different angle. Rather than positioning as a medicated solution, it reframed the category as scalp health through a more premium, salon quality lens. The formulations feel closer to high end haircare than traditional dandruff products. That matters, especially for a female consumer who is not just trying to eliminate flakes, but also cares deeply about hair health and how her hair looks and feels. Jupiter delivers both, turning a functional purchase into something that fits naturally within a broader beauty routine.

Wizard Wellness is rethinking allergy care from the ground up.

Legacy brands are built around reaction. You have symptoms, you take a pill. Wizard is built around prevention.

The brand is rooted in the idea of the nasal microbiome, focusing on daily nasal health and strengthening the body’s natural defenses before symptoms even begin. This shifts the category from episodic use to ongoing care, from reactive to proactive. It expands usage occasions and creates a fundamentally different relationship with the consumer, one centered on wellness rather than relief.

Paired with modern branding and a more human tone, Wizard stands in stark contrast to a category defined by clinical boxes and pharmaceutical language.

Norms takes on hemorrhoid care with an equally bold perspective.

This is a category that has long been defined by stigma, and the branding has only reinforced that. Norms flips the script. It leans into normalization, starting with the name itself, and uses humor to disarm the consumer. That tone, combined with thoughtful design and effective products, makes the category far more approachable. By removing the shame, Norms is connecting with a large group of consumers who have long settled for products that never tried to earn their loyalty.

And then there is Vacation.

When we invested, sunscreen was a commoditized category. Vacation reimagined it entirely as leisure enhancing sunscreen, turning a functional product into part of the enjoyment of being outside.

At the center of that is product experience, most notably what the brand calls the world’s best smelling sunscreen. Fragrance has become synonymous with the brand. It is not just a feature, it is a defining asset that drives emotional connection and repeat usage in a category that historically ignored sensory experience.

Beyond the product, Vacation has embedded itself in culture through partnerships with Pepsi, Arizona Iced Tea, and Prince. These collaborations extend the brand beyond the shelf and reinforce its positioning in a way that feels fresh, nostalgic, and highly differentiated.

Vacation did not just take share, it created a new lane.

Why Retailers Are Paying Attention

One of the most important signals we see today is how retailers are responding.

FDM retailers have been dealing with the same challenge for years. Categories like dandruff care, allergy, hemorrhoid treatment, and sun care have become stagnant. The same SKUs, the same brands, the same experience.

At the same time, the consumer has moved on. They are discovering brands on TikTok. Buying on Amazon. Engaging with more curated environments like Sephora. Retailers know they need to modernize these aisles.

Brands like Jupiter, Wizard Wellness, Norms, and Vacation give them a way to do that.

These brands bring energy back into the category. They attract new consumers. They create a reason to reset the shelf. And importantly, they drive growth, not just share shift.

That is why we are seeing real enthusiasm from buyers. These brands are not just being listed. They are being championed.

The Thesis Behind the Thesis

What connects all of these investments is a simple but powerful idea.

Category size and brand staleness are the two most important variables in identifying disruption opportunities.

When you find a category measured in the billions, dominated by brands that have not meaningfully innovated in decades, and populated by consumers who are underserved by the current experience, you have the ingredients for outsized brand building.

The playbook is not complicated. Bring modern branding. Build better formulations. Engage directly with the consumer. Show up with a real point of view.

The incumbents are too large and too optimized for scale to move quickly. By the time they respond, the disruptor has already captured attention, loyalty, and wallet share.

After more than 30 years of investing in consumer brands, I have seen this pattern repeat again and again. The most exciting outcomes often come from the categories that make people pause and ask, “why would you invest there?”

The answer is always the same. Look at the size of the market. Look at what is on the shelf. Then ask whether the consumer is truly being served.

More often than not, the opportunity is sitting right there.

What We Are Watching Next

At TBV, we are constantly looking for the next category that fits this pattern. Large, habitual, under loved and ready for reinvention. There are more of them than most people realize.

We would love to hear from you.

What categories do you think are ripe for disruption?

If you walk into a boardroom and ask, “How do we position this business for an exit?”, it will sound like the right question. In reality, it is often the wrong starting point.

That question subtly shifts how you operate. You begin to manage for perception instead of substance, prioritizing what looks good in a data room over what actually builds a durable business. Over time, that gap compounds, and it is very hard to reverse.

The irony is that the more you optimize for an exit, the less likely you are to achieve a great one.

The Better Lens

The best founders we work with take a different approach. They run their businesses like they will own them forever.

“We do not build businesses to sell, we build businesses to be great. If they are great, they will be sold.”
— Bernard Arnault

That mindset creates discipline. It removes shortcuts and forces decisions that prioritize durability over optics. It also reflects a reality that is easy to ignore, exits are not guaranteed. Processes fall apart, buyers re-trade, and market conditions shift, sometimes late and unexpectedly. If your business strategy depends on a clean exit, you are building on unstable ground.

What This Looks Like in Practice

You can see this clearly across several of the brands we have partnered with.

Crown Affair invested early in ritual, storytelling, and product experience, decisions that did not maximize short-term efficiency but built deep emotional connection and long-term loyalty. Over time, that shows up in repeat purchase behavior, pricing power, and brand resilience.

Vacation took a similarly intentional approach, building a fully immersive brand world where creative, tone, packaging, and product all reinforce each other. That level of investment is not optimized for early margins, but it creates differentiation that compounds across channels.

Dieux leaned into transparency and community from the beginning, investing in trust and education rather than just acquisition. It is a slower build, but one that results in a far more durable relationship with the consumer.

K18 committed to science and clinical validation, an expensive and time-intensive path that ultimately created real defensibility. These are not decisions you can manufacture late in a process, they have to be made early and consistently.

“Brand is the moat. You can outperform on performance marketing for a while, but if the brand is not there, it eventually catches up to you.”
— Beauty operator perspective

Across these examples, the pattern is clear. None of these choices were made to optimize near-term performance, they were made to build something enduring.

A Lesson That Stuck With Me

One of the most instructive moments for me came during a process where, on paper, everything looked strong. The business was growing, margins were healthy, and the story was compelling.

As diligence progressed, the focus shifted. Buyers began to question what was not there. They noticed where marketing investment had been pulled back, where key hires had not yet been made, and where systems had not been built to support scale. Nothing was broken, but it became clear the business had been managed, at least in part, for presentation.

That realization did not kill the process, but it changed it. Confidence softened, adjustments were made, and terms evolved. It reinforced a lesson that has stayed with me, buyers are not just buying your numbers, they are buying the truth behind your numbers.

Case Study Callouts

Case Study 1: The “EBITDA Optimization” Trap
A founder preparing for a sale pulls back on brand marketing to expand margins. EBITDA improves, but growth begins to slow as demand softens. During diligence, buyers recognize that prior investment drove performance, not current momentum, and adjust valuation accordingly.

Case Study 2: The “Deferred Investment” Problem
Another business delays key investments in systems, team, and operations to preserve profitability. While the numbers look efficient, diligence reveals that meaningful investment is required post-close, leading buyers to underwrite that risk through lower valuation or structured terms.

Where Things Go Wrong

These situations are not outliers, they are common. Founders begin making small, rational decisions that prioritize short-term optics, trimming brand spend, slowing product pipelines, deferring customer experience investments, and managing inventory for appearance rather than performance. Hiring gets delayed, and infrastructure investments get pushed out.

Individually, each decision feels manageable. Collectively, they weaken the business.

There are also more subtle financial adjustments that creep in, pulling forward revenue, delaying expenses, or managing working capital in ways that are not sustainable. None of this is unusual, but all of it is visible to a sophisticated buyer.

“Price is what you pay. Value is what you get.”
— Warren Buffett

Buyers are not just evaluating your numbers, they are evaluating how those numbers were created and whether they can be sustained. When they see short-term optimization, they adjust, sometimes through valuation, sometimes through structure, and sometimes by walking away.

The TBV Perspective

At TBV, one lesson shows up consistently, the best outcomes come from businesses that create optionality.

When a company is built with long-term discipline, strong brand equity, real infrastructure, and a thoughtful team, it has multiple paths. It can continue compounding, partner, or sell from a position of strength.

“Exits are not goals, they are consequences.”
— Peter Thiel

When a business is built purely for an exit, it often has only one path, and that dependency introduces risk.

Final Thought

If you want the best outcome, including at exit, stop optimizing for it. Build something you would be proud to own for the next ten or twenty years, investing in the brand, the team, and the infrastructure even when it compresses short-term margins.

Because the companies that command the most attention, and the highest value, are not the ones built for a process. They are the ones built to last.

Most people were pitching AI. We showed up with sunscreen.

That contrast captured the entire experience for us at True Beauty Ventures.

A Marketplace for Capital

For anyone in the alternatives ecosystem, iConnections has quickly become one of the most important annual gatherings in the investment world.

Thousands of attendees descend on Miami Beach each year, including hedge funds, venture capital firms, private equity managers, family offices, endowments, and institutional allocators. What makes the event unique is the concentration of decision makers. Walking through the convention hall you quickly realize that almost everyone in the room is either managing capital or allocating it.

Behind the event is Ron Biscardi, who launched the platform with a simple but powerful idea. Create a technology platform that helps allocators and investment managers efficiently find each other, then bring them together in person to deepen those relationships.

Before the conference even begins, managers and allocators schedule meetings through the iConnections platform. Once everyone arrives in Miami, the conversations move from the digital platform to the real world.

The result is something that feels less like a traditional conference and more like a high speed marketplace for capital formation, and like any marketplace, relationships matter.

As Ron has said about gatherings like this,

“At the end of the day, people buy from people they like and want to do business with.”

That observation proved to be remarkably accurate over the course of the week.

Monday Night: Beauty at Carbone

Our week actually began Monday evening before the conference officially started.

We were invited to provide gift bags for a VIP dinner at Carbone, one of Miami Beach’s most iconic restaurants. Cristina was in attendance.

Rather than traditional corporate gifts, we filled the bags with products from our portfolio brands, including Vacation, Crown Affair, Dieux, Jupiter, Sofie Pavitt, evolvetogether and Caliray.

For us this moment felt meaningful.

Behind every product in those bags is a founder we believe in and a brand that started with nothing more than an idea and a lot of conviction. Watching those products circulate around a room full of investors was a powerful reminder that venture investing in consumer ultimately comes down to something very simple.

People connecting with products.

Sometimes the best way to explain a consumer investment strategy is simply to put the products in someone’s hands.

Tuesday: Building Brands with Lach Hall

Tuesday was our first full day at the conference.

The highlight for us was presenting alongside Cristina and Lach Hall, the incredible co-founder of Vacation.

Our conversation focused on something we spend our lives thinking about, building brands in venture backed consumer companies.

We spoke about the strategy behind True Beauty Ventures and why we believe sector specialization matters in early stage investing. Lach then shared the origin story of Vacation and the progress the brand has made since we first partnered together.

Hearing the story directly from the founder brought the conversation to life in a way that no investor presentation ever could.

Great consumer venture investing is not just about capital. It is about partnership.

By the end of the day we were exhausted. That night I did something I almost never do at conferences.

I ordered room service and went to bed.

The best venture partnerships feel less like investors and founders, and more like teammates building something together.

Sixteen Allocator Meetings in Two Days

Wednesday and Thursday were the real reason we came to Miami. Meetings.

Over those two days Cristina and I held sixteen meetings with potential investors, beginning early conversations around our upcoming True Beauty Ventures Fund III.

Most of the allocators we met were single family offices and multi family offices. That was not surprising. Family offices often have flexible mandates and a willingness to invest in specialized managers.

One theme came up repeatedly.

In a week dominated by AI venture strategies, our focus on beauty and wellness brands felt refreshingly different.

To bring our strategy to life we brought gift bags filled with portfolio products to many of our meetings. Passing around a sunscreen or haircare product turned out to be a much more engaging way to explain consumer investing than flipping through slides.

Now to be clear, we have no idea yet whether those sixteen meetings will ultimately convert into LP commitments. Fundraising takes time.

But the conversations we had and the people we met were memorable, and those relationships will stay with me for a long time.

In a sea of AI venture funds, a beauty and wellness strategy suddenly felt refreshingly different.

A Proud Moment for Cristina

One of my favorite moments of the week came when Cristina was invited to join a live podcast recording right in the middle of the convention hall.

The setup looked like a broadcast studio. Lights. Cameras. A crowd gathering around the stage.

From where I was standing it honestly felt like she was sitting on the set of CNBC.

Cristina’s journey from investment banker to consumer private equity to beauty operating executive to co-founder of True Beauty Ventures is both powerful and inspiring. Watching her tell that story in front of a large audience was one of the proudest moments of the week for me.

Watching Cristina tell her story on that stage was one of the proudest moments of the week for me.

Meeting Daniel Dart

The most memorable moment of the week for me personally was meeting Daniel Dart of Rock Yard Ventures.

Daniel has one of the most extraordinary stories I have encountered in the venture world.

He grew up in extremely difficult circumstances and spent much of his early life surrounded by instability and crime. As a teenager he became involved with gangs and addiction. Eventually that path led to prison and periods of homelessness.

For many people that would have been the end of the story. For Daniel it became the turning point.

After leaving prison he committed himself to rebuilding his life through education and relentless determination. Over time he worked his way into some of the most respected institutions in the world, eventually earning graduate degrees from the London School of Economics and later completing an Executive MBA at MIT Sloan.

Today he runs Rock Yard Ventures, a venture firm focused on backing infrastructure and industrial technologies that power the real economy.

But what struck me most about Daniel was not his résumé. It was his generosity.

Within minutes of meeting us he began introducing us to investors across the conference. Over the course of the week he connected us to numerous allocators, gave up his scheduled podcast time for Cristina to tell her story, and shared thoughtful insights about fundraising.

At one point he said something that made us laugh but also stuck with me.

“You must be great investors, but you are horrible fund raisers.”

He said it with a smile. His point was simple. If we tell our story more consistently to the right audience, we should have no problem raising our next fund.

Sometimes the best advice comes from people who have climbed much steeper mountains.

Seeing TBV Everywhere

One of the most surreal moments of the week was seeing True Beauty Ventures appear across the conference.

Our TBV sizzle reel played on the large jumbotron screens throughout the venue.

One of the prizes at the spinning wheel was a TBV gift bag, a logoed tote filled with products from our portfolio brands.

Walking through the convention hall and seeing people carrying those bags was incredible.

For a firm like ours that started only a few years ago, it was amazing to see our brands highlighted at one of the largest allocator gatherings in the world.

For a young venture firm, seeing our portfolio brands showcased across the conference was a surreal moment.

Exhausted but Energized

By the end of the week we were exhausted.

But we were also energized.

We left Miami with sixteen allocator meetings, dozens of new relationships, and early momentum as we begin conversations around Fund III. Whether those meetings ultimately convert into LP commitments remains to be seen. Fundraising is rarely a straight line.

But the exposure for True Beauty Ventures, the people we met, and the stories we heard made the week unforgettable.

And perhaps most importantly, the experience reinforced something we already believe deeply.

Even in a world currently obsessed with artificial intelligence, great consumer brands still matter and the investors who truly understand them remain surprisingly rare.

That is exactly where we want to be.

At True Beauty Ventures, we have made several very early investments where the brand had not yet sold a single unit to consumers, but did have a committed retail launch at inception. That single fact meaningfully changes the risk profile, the capital path, and the speed at which a business can begin generating real revenue.

This does not mean these investments are low risk. They are still very risky. But they are a different type of risk than backing a true stealth brand with no distribution partner, no DTC data, and no observable demand signals.

“Risk comes from not knowing what you are doing.”
— Warren Buffett

When a brand launches with Sephora, revenue often begins on day one through an opening purchase order. The brand gains immediate in-store visibility inside a retailer best known for discovery and early brand incubation. It also receives third-party validation that can help unlock talent, vendor relationships, and future capital.

The same concept can apply to Ulta Beauty and Target. While historically less associated with discovery than Sephora, both have made meaningful strides in emerging brand curation and differentiated assortments.

The practical result is that pre-launch with secured distribution often looks more like early revenue with compressed timelines than traditional pre-revenue venture risk.

Across our own portfolio, we have leaned into this pattern in multiple ways.

TBV Fund I pre-revenue investments included (i) Caliray, which launched all doors at Sephora North America backed by founder Wende Zomnir, co-founder of Urban Decay, and (ii) Cay Skin, which launched in roughly 250 Next Big Thing Sephora doors, founded by supermodel Winnie Harlow (almost 10MM Instagram followers).

TBV Fund II pre-revenue investments include (i) Hung Vanngo Beauty, which launched in approximately 300 Sephora doors, founded by celebrity makeup artist Hung Vanngo (over 4M Instagram followers), (ii) Wizard Wellness, which did not have a retailer confirmed at inception but generated strong initial inbound interest from Food, Drug and Mass retailers and (iii) Biologica, which launched without a retailer but operates in the ingestible wellness category, which is best suited to DTC and Amazon given replenishment and usage frequency.

These paths all carry risk. They simply carry different kinds of risk.

One downside of retail-at-launch that often gets underestimated is the importance of brand awareness. Retailers do not create brands. Brands create brands. I have written before about this idea. Brands build brands, retailers do not.

Launching into retail before meaningful brand awareness exists creates real pressure on the brand. The retail productivity clock starts immediately. Velocity expectations exist from day one. Marketing spend must ramp quickly. At the same time, retailers like Sephora are launching a growing number of new brands each year across skincare, hair, fragrance, and color, which increases the burden on both the brand and the retailer to invest in brand awareness.

“Distribution without demand is a tax on your business.”
— Andrew Chen, General Partner at Andreessen Horowitz

Retail also introduces significant working capital risk. Inventory requirements are heavier and front-loaded. Cash conversion cycles are longer. Capital needs tend to rise faster than many first-time founders expect.

This is why we often view less than full-door launches as a major positive. They carry less initial risk, allow brands to prove velocity in a controlled footprint, and leave door expansion as a powerful medium-term growth lever. Full-door distribution at inception can look attractive on paper, but it also magnifies execution risk if awareness and demand are not yet established.

On the flip side, brands that build meaningful traction in DTC before retail often show stronger initial velocity once they launch into stores. That dynamic explains why we are increasingly comfortable underwriting DTC-only brands when the underlying DTC metrics are compelling.

When evaluating a DTC-only brand, we look for signals such as sustained month-over-month traffic growth, a meaningful percentage of organic or direct traffic, strong repeat purchase rates within expected replenishment cycles, improving blended CAC over time, healthy contribution margins after marketing, increasing AOV driven by bundling or regimen behavior, and evidence that paid media is amplifying demand rather than manufacturing it.

We want to see that performance marketing supports a brand that consumers already want, not one that depends entirely on paid acquisition to survive.

“Traction is the best form of validation.”
— Naval Ravikant, Co-Founder of AngelList

In many cases, these brands may actually have a higher probability of near-term retail success than a true stealth brand with no signal and no distribution lined up. This has clearly been the case with the launch of Dieux at Sephora, which built a healthy DTC business largely off organic demand generation.

All of this connects back to a core point from a prior Substack on investing early. Not all pre-revenue investments carry the same risk.

If we are investing very early, we generally prefer stealth plus confirmed distribution over stealth plus no retailer and no DTC signal. Both are risky. One simply removes a major unknown.

That is the nuance behind the phrase: Pre-launch is not pre-revenue if distribution is secured.

But there is one factor that matters more than any of the above. The single biggest risk mitigator in early-stage investing is the founder behind the brand.

Distribution can be secured. Metrics can look attractive. Retailers can validate concepts. But none of that replaces founder quality. The ability to recruit great talent, iterate quickly, raise capital, build culture, and navigate inevitable setbacks ultimately determines outcomes.

“Great founders are the ones who can turn bad plans into good outcomes.”
— Reid Hoffman

Which is why, at the end of the day, founder strength sits at the center of our assessment and underwriting. This framework is core to how we think about emerging growth investments at TBV. We do not categorize opportunities by seed, Series A, or pre-launch. We categorize them by risk type and by which risks have already been partially removed.

That mindset is a core part of what we are continuing to build into our next fund.

— Rich

But later proves nothing about risk if you still lack category expertise.

Specialization changes the investing equation.

“Stage is not the risk. Investing without category understanding is.”

Generalists spread capital across many sectors and struggle to develop deep pattern recognition. Each opportunity feels unique, and conviction often depends on extrapolating sparse data rather than drawing on deep context. That makes early stage feel unsafe and later stage feel safer, even though later stage typically comes with higher valuations and far more competitive deal processes.

Specialists operate differently.

By focusing on a single category, specialists see hundreds of companies and recurring deal patterns. They learn which early signals matter and which ones do not. They also understand which founder mistakes repeat themselves over and over. That proximity allows specialists to underwrite early with confidence rather than guesswork.

This is not just theoretical. Broader industry data supports it. The Mantra Niche Private Equity Index, which tracks thousands of niche investments, shows that specialized private equity strategies have generated meaningfully higher returns than mainstream peers. Across 2011–2021 vintages, niche strategies delivered roughly 2.4x MOIC and approximately 32 percent IRR, compared to about 1.7x MOIC and 15 percent IRR for broader benchmarks.

That data aligns closely with our experience in beauty and wellness.

Specialists often get into exceptional companies earlier, with less competition and more attractive terms. They do not chase risk. They mitigate it through knowledge.

Why Earlier Can Actually Be Safer

When you invest early with true category expertise, several things shift in your favor. Competition is lower, entry pricing is more attractive, founder alignment is stronger, and you can influence outcomes when it still matters.

That influence is critical because many of the most damaging mistakes in beauty and wellness are made early and are extremely difficult to correct later. Cost of goods is a prime example. Poor formulation decisions, inefficient manufacturing, or pricing without margin discipline can lock a brand into structurally weak economics. Once a product scales, those issues are incredibly hard to unwind without disrupting growth or brand equity.

The same dynamic applies to channel strategy, team build, and product architecture. These early decisions compound over time, for better or worse.

That is why investing earlier, when paired with real sector specialization, can actually reduce risk. It allows investors to partner with founders when guidance has the greatest impact and to help avoid mistakes before they calcify.

“Many of the most expensive mistakes in beauty and wellness are made early and are incredibly difficult to unwind later.”

A Case in Point: K18

We invested in K18 around product launch, long before traditional financial signals existed. To many investors, that might have looked early and risky. To us, it looked familiar.

We saw the building blocks of long-term success immediately. The founders and team had deep credibility and clear vision. The science was truly differentiated, patented, and delivered real product results at scale. Salon professionals were validating efficacy through powerful testimonials well before broad market proof. The brand launched with a disciplined hero product strategy rather than a scattered SKU approach.

That early read mattered. Our specialization allowed us to see what others did not and to invest early with conviction. Early investing in a space you know well is not contrarian risk taking. It is pattern recognition that leads to better terms and outsized outcomes.

Specialists vs Generalists, The Real Difference

The difference is proximity.

Generalists rely on broad data to reduce uncertainty and tend to compete hardest once outcomes are visible. Specialists build conviction earlier by identifying meaningful signals in the noise. Industry research shows that this focus consistently leads to stronger performance.

“Generalists wait for certainty. Specialists build conviction earlier, when competition is lower and terms are better.”

For True Beauty Ventures, this approach is not about taking more risk. It is about taking better risk.

By investing earlier, we face less competition, secure more attractive entry terms, and have greater ability to shape long-term outcomes. The underlying risk is not higher, but the potential reward is meaningfully better.

That is exactly what we believe drives the best returns for our investors.

Stage is not the risk. Ignorance is.

And when you know the category deeply, investing earlier is not just logical.
It is the strategy that makes the most sense.

What frustrates me even more is learning why.

Too often, the explanation is the same. The founder did not think we invested that early.

That frustration is exactly why this post exists.

A Recent Moment That Reinforced the Point

We are about to close a seed investment right now. The only reason this opportunity exists is because we spent time with the team in person and they told us directly that they were raising capital.

At one point, I asked a very simple question.

Why were you not talking to us already?

The answer was honest and revealing.

They did not think we invested this early.

That moment reinforced two things.

• Being in the room still matters, real relationships get built in person

• We need to set the record straight, again, on what we actually do

This company is not an outlier. This misconception shows up repeatedly, and every time it does, it represents missed opportunity, for founders and for our investors.

What the Data Actually Shows

If there is any confusion about what we do and where we invest, the data tells the story far better than labels ever could.

When you look at how capital has actually been deployed across TBV Fund I and TBV Fund II, a very clear evolution emerges.

Fund I

• Investments spanned seed through Series C

• The plurality of capital was deployed at bridge to A and Series A

• Early checks created ownership, follow on investments increased conviction

Fund II

• Initial checks moved meaningfully earlier

• Seed and pre seed represent a much larger share of first checks

• Series A dollars will more often represent follow on investments into prior seed investments

• Series B dollars are concentrated follow on investments into Fund I winners, Crown Affair and Vacation

Fund II combines earlier entry points with larger ownership and more de risked follow on investments into businesses we know exceptionally well.

Stage is not our filter. Sector is.

Putting Real Names Behind the Strategy

One of the most persistent misconceptions about True Beauty Ventures is that we do not invest at the earliest stages. The reality is that we always have.

Pre launch and very early investments across our funds include:

Fund I

• Caliray and Cay Skin, pre launch

• Dieux and evolvetogether, very early in the brand lifecycle

Fund II

• Hung Vanngo, Wizard Wellness and Biologica, pre launch

• Sofie Pavitt, Norms and the Maker, very early in the brand lifecycle

Not every early investment is pre launch. What matters is proximity to formation, product market fit, and the ability to influence outcomes meaningfully.

This is not new behavior. It is simply more visible today.

Why Pre Launch Does Not Mean High Risk

Another important point often gets lost in the conversation.

Many of our pre launch investments launched commercially at inception with Sephora as a retail partner. That distinction matters.

Launching with Sephora from day one creates real revenue scale far earlier than a typical pre revenue brand launching without a distribution partner. Immediate distribution, consumer validation, and operational rigor materially change the risk profile.

Launching at inception with Sephora creates real revenue scale far earlier than a typical pre revenue brand, fundamentally changing the risk and return profile of a pre launch investment.

Getting involved earlier in these situations allows us to be more influential at one of the most important moments in a brand’s life, before foundational decisions are locked in.

Why Earlier Partnership Improves Long Term Outcomes

From our perspective, investing earlier allows us to do our best work.

• We can shape brand positioning before it calcifies

• We can influence distribution strategy before mistakes compound

• We can help founders navigate early scale with clarity and focus

The work looks similar whether a brand is pre seed, pre launch, or very early post launch. The difference is timing.

Earlier partnership leads to better long term outcomes.

Our Mandate Is Simple

We fully understand that our strategy is not straightforward and continues to evolve.

Our mandate, however, is very simple.

• If you are a beauty, health, or wellness brand, you meet our mandate

Stage is not the gate. Sector is.

We decide when to invest, at what stage, and how much to invest based on opportunity, conviction, and fit.

Looking Ahead, Including Incubation

As we continue to evolve, we are also exploring new ways to deploy capital. Brand incubation naturally comes up in those discussions.

I would not be surprised if Fund III includes some incubation activity.

From our perspective, this work is very similar to pre seed investing.

• Same hands on involvement

• Same operating support

• Same reliance on experience and judgment

We do not believe this changes the risk profile of the fund. We believe it can meaningfully increase the return profile.

The Bottom Line

This post is not about labels. It is about access and alignment.

If founders assume we do not invest early, we miss opportunities we should see. If we miss those opportunities, our investors miss potential returns.

We are sector specialists with deep domain expertise, pattern recognition, and an unmatched view into beauty, health, and wellness. Our responsibility is to exploit that advantage in every way that drives better outcomes for our LPs.

Setting the record straight is part of that work.

If you are building a beauty, health, or wellness brand and raising capital at any stage, talk to us early, the earlier the partnership, the better the long term outcome.

When markets tighten or sentiment shifts, capital gravitates toward what feels familiar. Bigger funds feel safer. Broader mandates feel more durable. Specialization gets framed as “niche” or risk.

That framing is backwards.

When I wrote my first Substack post, The Small Fund Conundrum, I was working through a simple idea in public. Small funds do not lose because they lack scale. They lose when they try to behave like large ones.

As we think about embarking on a new fundraise in 2026, that idea feels even more relevant. Not just because of where we are in the cycle, but because the industry has quietly proven something important.

Small funds do not lose because they are small.
They lose when they try to look big.

The conundrum never really went away

The structural tension facing smaller and emerging managers still exists.

LPs want early access and asymmetric upside. At the same time, they want predictability, pattern recognition, and institutional polish. Smaller funds sit in an uncomfortable middle. Too early to look like traditional private equity. Too established to act like angels.

The real question has never been whether small funds can generate returns. It has always been whether they can consistently see the right opportunities, win allocation, and help companies scale without breaking what made them special in the first place.

The answer is yes, but only if focus is embraced intentionally.

Why focus creates an edge scale cannot

Generalist investors rely on breadth. Sector specialists rely on repetition.

That difference matters more today than it did even a few years ago. When you review hundreds of companies inside the same ecosystem every year, patterns begin to surface early. You develop real benchmarks around growth rates, margin structure, hero product behavior, distribution readiness, and team buildout. You also develop a much sharper sense of where capital should not go.

This is not about narrowing opportunity. It is about sharpening judgment.

Repetition builds judgment.
Judgment builds conviction.
Conviction builds access.

Focus creates context. Context creates speed. Speed creates access. Founders feel that difference immediately, especially in categories where nuance matters.

Why LPs often misprice specialization

Skepticism around specialization rarely comes from return data. It usually comes from portfolio construction mechanics.

Many LPs are structurally oriented toward diversification. A focused mandate can look risky on paper, even when company-level risk is lower because the GP has seen the same movie many times before. Specialization also does not always fit neatly into traditional buckets. It can look too venture-like for private equity teams and too operational for venture teams, which complicates internal benchmarking.

There is also a tendency to confuse familiarity with safety. Categories that feel intuitive get credit. Categories that require lived experience, like beauty and wellness, often get discounted despite strong fundamentals.

Specialization often lowers company-level risk,
even if it complicates portfolio math.

Beauty and wellness is not a niche

Beauty and wellness often gets labeled as narrow by investors who do not spend real time inside the category. The reality looks very different.

This is a global market measured in the hundreds of billions. Consumption is recurring and habitual. Innovation cycles are constant, not episodic. Brand differentiation still matters, which is increasingly rare in consumer more broadly.

Strong brands in this space can scale efficiently around hero products. Gross margins support reinvestment and profitability. Strategic buyers remain active across cycles, even when deal volume slows elsewhere.

Beauty and wellness is not a theme.
It is an ecosystem.

Calling the category niche usually signals distance from it, not insight into it.

Where specialization really shows up, after the check is written

The real advantage of sector focus becomes most obvious post-investment.

When you operate inside the same ecosystem repeatedly, you stop guessing. You know when a brand is truly ready for Sephora or Ulta, when Amazon is additive versus distracting, and when international expansion helps or hurts. You understand which hires unlock the next phase of growth and which ones create complexity too early. You develop a clear view of how acquirers actually underwrite growth and profitability, not just how they talk about it publicly.

This knowledge compounds. Every investment benefits from the ones that came before it. Every founder gains access to pattern recognition that cannot be replicated by a broad, category-agnostic portfolio.

Why smaller funds are structurally harder to raise

One of the least discussed realities in fund formation is that smaller funds are often harder to raise than larger ones, not because of strategy quality, but because of institutional constraints.

Many institutional LPs operate with large minimum commitment sizes and strict concentration limits. A common framework looks like this. An LP may have a $25M minimum commitment size and a policy that prevents them from owning more than 10% of any single fund.

The math becomes straightforward.

If an LP cannot exceed 10% of a fund, then a $25M minimum effectively requires a fund size of at least $250M. Anything smaller is not realistic for that LP, regardless of how compelling the strategy or track record may be.

For a $75M to $100M fund, the constraint shows up even earlier. Any LP with a minimum commitment of $15M or higher is likely too large. Participation would either breach concentration limits or dominate the fund in ways that do not work for either side.

This dynamic quietly eliminates a large portion of institutional capital from consideration before the conversation even begins.

As a result, smaller funds must rely more heavily on high net worth individuals and family offices. These allocators typically have more flexible minimums, fewer rigid concentration rules, and a greater willingness to underwrite the GP rather than the structure alone.

Smaller funds demand conviction.
Bigger funds benefit from comfort.

This path is harder. It requires more education, more trust, and more direct engagement. But it is also often better aligned with smaller, focused funds that are optimizing for ownership, conviction, and long-term outcomes rather than management fee scale.

Reframing the small fund advantage

Small funds do not win by pretending to be large ones. They win by being focused where others are broad, selective where others feel pressure to deploy, hands-on where others stay distant, and patient where others need velocity.

A concentrated, sector-specialized fund with deep conviction can often outperform much larger pools of capital that lack the same clarity.

That was true when I wrote my first Substack post. It is even more true today.

Optimizing for returns is harder than optimizing for fees.
That is a choice, not an accident.

Looking ahead to Fund III

As we think about the next chapter, the takeaway is simple.

Specialization is not something to apologize for. It is the strategy.

Beauty and wellness is not a side bet or a thematic overlay. It is a large, resilient, and constantly evolving ecosystem where experience, repetition, and relationships materially change outcomes.

Choosing to build a smaller, more narrowly focused fund, even when it is harder to raise, reflects a belief that long-term returns matter more than short-term ease.

That belief sits at the center of how we think about Fund III, and why the small fund conundrum is not something to escape, but something to embrace.

As we step into a new year, it feels like the right moment to reflect on what made 2025 so meaningful.

Recognition That Matters

Being named BeautyMatter Investor of the Year was a real honor. Awards are never the goal, but recognition from a publication that truly understands this industry means a great deal to us. We see it as validation of a strategy rooted in focus, long term partnership, and deep sector specialization, and as recognition of the founders we are fortunate to support.

We also saw many of our brands receive recognition in the Beauty Matter Next 50 list (Sofie Pavitt, evolvetogether and Iris + Romeo) and Beauty Independent Beacon Awards (Crown Affair).

Expanding the TBV Team and Platform

We continued to invest in people in 2025, both internally and across our broader platform.

We welcomed Maclean Liotta to the TBV team, adding additional perspective and capacity as we continue to scale thoughtfully.

We also expanded our operating partner bench with two important additions:

• Aaron Mizrahi, focused on Amazon strategy and execution, helping our brands navigate and win in one of the most critical and complex channels in beauty
• Marcel Lopez, focused on operations and supply chain, bringing deep experience to help founders manage cost, complexity, and scale with discipline

These additions reflect how we think about value creation. Practical support, real operating experience, and partners who help founders avoid costly mistakes as they grow.

A Growing and Differentiated Portfolio

In 2025, we added six new brands to the TBV portfolio, continuing to back founders who combine strong brand vision with operational rigor.

New investments included:

• Jupiter – a scalp care brand redefining dandruff and scalp treatment with clinically proven, modern formulations
• Hung Vanngo – a prestige beauty brand from one of the industry’s most respected makeup artists, bringing professional artistry and credibility to a broader consumer audience
• Biologica – a science driven women’s health and supplementation brand focused on hormonal balance and long term wellness
• Norms – a modern wellness brand rethinking everyday health routines, such as hemorrhoid care, with clean formulations, strong branding design, and a clear point of view

In addition, we completed two stealth investments in 2025 that we are incredibly excited about and plan to officially reveal in 2026.

Each of these investments reflects what we look for at TBV: differentiated positioning, founder depth, real consumer need, and the potential to build enduring brands.

At the same time, our existing portfolio continued to mature, with several brands entering their next phase of growth and creating compelling follow-on opportunities. One of the advantages of our focused strategy is depth. We know these businesses well, which allows us to lean in with conviction when it matters.

Mentorship in Action

Mentorship remains core to our identity, and 2025 was a big year on that front.

We celebrated six brands completing our Bridge Mentorship Program, a milestone that reflects our commitment to helping early-stage founders become truly funding ready. The caliber of founders coming through the program continues to impress and inspire us.

Cristina and I also launched our individual Substacks this year, creating more space to share perspective and lessons learned:

• Beauty is my Business, written by Cristina

• Notes from a Beauty Deal Junkie, written by me

Notes From a Beauty Deal Junkie

Sharing lessons from 30+ years in private equity across buyouts, growth, and venture with a focus on beauty. Each post offers practical takeaways on building brands, scaling teams, and driving successful outcomes for founders, operators, and investors.

By Rich Gersten

Cristina also launched Coffee with Cristina, an ongoing series designed to support and mentor founders and operators earlier in their journeys:
https://www.coffeewithcristina.com

Combined with Bridge Mentorship, these initiatives reflect a broader belief we hold at TBV, the industry is stronger when knowledge is shared and access is widened.

Bringing the Community Together

2025 marked several important firsts for TBV.

We hosted our first in person Annual General Meeting, creating space for deeper dialogue and connection with our LPs.

We also hosted our first Brand Founders Summit, bringing founders together across the portfolio for candid conversations, shared learning, and community building. The energy in the room was a powerful reminder of how valuable it is for founders to connect with peers who truly understand the journey.

Showcasing the Depth of Our Team

We continued to see growing recognition of the strength and depth of the TBV team.

Cristina took the stage at the WWD Beauty CEO Summit, among many other panels, sharing her insights alongside leaders shaping the future of the industry. Caroline was featured across multiple panels and press mentions throughout the year, reinforcing the breadth of expertise within our team and how actively we show up in the broader beauty conversation.

Looking Ahead

What stands out most about 2025 is not any single achievement, but the foundation it helped solidify.

As we head into 2026, we are entering the year with a strong and active investment pipeline, meaningful follow on opportunities across the portfolio, and increasing momentum across the platform. We will be presenting at iConnections in Miami in February, an important forum as we continue to build relationships across the institutional investor community.

We also expect to begin laying the groundwork for a third fund, while continuing to thoughtfully explore exit opportunities for select portfolio brands as they reach the right stage of maturity. As always, we will remain disciplined, patient, and focused on outcomes that make sense for founders and investors alike.

As we turn the page into the new year, I will leave you with four simple manifestations for TBV:

• A successful raise for TBV Fund III, allowing us to continue backing the next generation of exceptional beauty and wellness founders
• Meaningful distributions to our LPs, reflecting the progress and maturation of our portfolio
• The continued growth and evolution of our small but mighty TBV team, as we build this platform thoughtfully and with care
• Good health and happiness for our founders, partners, investors, and the broader community, because none of this matters without it

We are grateful for the journey and excited for what lies ahead.

Rich

Every founder wants that moment. The video that blows up. The sudden flood of comments. The Shopify dashboard flashing like a pinball machine. It feels like the dream, the shortcut, the golden ticket.

But to understand virality, you have to define it first. Virality is when a product or piece of content spreads faster than you can push it. Each viewer brings in more than one new viewer. The spread becomes exponential. At TBV we always remind founders that it takes one hundred golden BB shots to start that chain reaction. It is rarely one post or one creator. There is no silver bullet. It is usually the byproduct of layers of consistent, compounding actions.

The harder part is not going viral. The harder part is surviving it.

What actually makes things go viral

There is no exact formula for virality, but viral products tend to follow a recognizable pattern. They usually tell a simple story and solve a clear problem in a way that is easy to show on camera. The transformation is visible, the packaging pops, and the moment of discovery feels shareable. There is often a cultural hook or a sense of surprise that encourages people to send it to friends. Creators latch on because the product demos well and the videos are quick to make. Consumers latch on because they understand the idea instantly. These moments do not happen by accident, but they also cannot be manufactured on command.

TikTok, the amplifier that rewired beauty

TikTok changed the way beauty and wellness products break through. The algorithm pushes content to people who have never heard of you because discovery is interest based, not relationship based. Videos are short, easy to share, and built for speed. Trends move in hours, not weeks. A single creator can shape a narrative instantly. TikTok rewards product stories more than brand stories, which is why so many viral moments are driven by a product that performs well in a ten second demo. This creates massive trial, but it does not automatically create long term loyalty. The attention is real, but the connection is often shallow.

The blessing and the curse

Virality is intoxicating because it drives explosive awareness, draws creators into the conversation, lowers acquisition costs, and sparks retail interest. You see rapid spikes in EMV during these moments, and EMV growth often correlates with sales growth because creator activity tends to reflect consumer curiosity. For a moment, everything feels easy.

But virality also brings real challenges. A single SKU can take over your brand identity and create pressure to replicate the moment. Inventory can become a nightmare when demand swings wildly. Revenue becomes lumpy and unpredictable. Cohort retention may disappoint once the novelty fades. Retailers and potential buyers start to question whether the growth is real or just a flash in the algorithm. Chasing the next hit can distract teams from building the foundation they actually need. Virality provides speed, but enduring brands require stamina.

A cautionary tale

The rise and fade of the pink clay mask moment

A few years ago, the pink clay mask trend was everywhere, and Sand and Sky became the poster child for the movement. The brand exploded because the product was perfect for social. The bright pink formula caught attention instantly, the brush application looked satisfying, and the drying effect made every demo video feel dramatic. Creators loved it because it filmed well, and consumers loved it because it solved a simple problem in a simple way.

But the moment faded just as quickly as it arrived. Once the novelty wore off, repeat rates dropped. The results did not match the early hype, and the brand did not have a deeper story or world to keep consumers engaged. The category cooled, the trend cycle moved on, and the spike in awareness did not translate into long term brand equity. This is the difference between a viral product and a lasting business.

A rare example of virality that turned into loyalty

K18

K18 offers the opposite outcome and remains one of the clearest examples of how virality can accelerate discovery without defining the brand. The product broke through because the science was strong and the value proposition was clear. The before and after transformations were dramatic and the credibility from professional stylists fueled trust. TikTok lit the match by amplifying thousands of real demos, but the underlying story was more than a trend.

K18 sustained its growth because the product worked. Retention was high, the pro community validated the performance, and the brand expanded its roadmap with discipline. The team never rushed into opportunistic launches. They stayed focused on the core promise of repair and built a brand narrative that could carry multiple categories. Virality brought consumers to the door, but the product kept them there.

The real work: building a brand that lasts

The brands that endure are not built for virality. They are built for clarity, community, and consistency. They start with a worldview, a reason to exist, and a north star that guides every creative and strategic decision. These are the brands that grow slowly and steadily, and they are also the brands buyers value most.

Below are three TBV brands that show how a strong foundation creates staying power.

Vacation

A world built on joy, nostalgia, and sensory delight

Vacation did something rare. It built an entire world before it built a product. Everything about the brand, from the playful resort inspired tone to the vintage leisure visuals, creates a world consumers want to enter. The scents feel cinematic, the packaging feels collectible, and the voice feels like a sun soaked postcard from a trip you wish you were on. Consumers return to Vacation because the products make them feel something, not just because the formulas work well. The consistency of the brand world is the engine and the creativity behind it is what gives the business real longevity.

Crown Affair

Ritual, calm, intention

Crown Affair stands out in haircare because it offers calm in a category filled with noise. The brand believes in ritual and daily care, and that belief shows up in the warm, minimal aesthetic and the thoughtful product line. Everything feels intentional, from the design language to the slow and steady expansion into new categories. Consumers stay because the products become part of their routine and the ethos resonates deeply. This is emotional loyalty, not trend chasing. Crown Affair builds trust by moving at its own pace and honoring the values that made the brand distinctive in the first place.

Dieux

Trust as a brand moat

Dieux built the kind of trust most brands wish they had. The team leads with transparency on formulas, pricing, claims, and decisions, which makes the brand feel honest in a space that often feels confusing. The voice is smart and human, and the community feels seen and respected. Product launches are thoughtful, not reactionary, and that pacing reinforces the idea that Dieux builds for the long term. Consumers believe in the mission and the science first approach, and that belief turns into real loyalty. Trust has become Dieux’s strongest competitive advantage.

So should founders chase virality

Not really. You should not design your entire business around a moment you cannot control. You should design your brand so that if a viral moment happens, you can sustain the demand and turn it into long term value. That means building a clear identity, nurturing a community, creating great products, hiring a team that executes, and focusing on consistent growth rather than spikes.

Buyers value brands that can endure for decades. They fear brands that rise too fast and fall just as quickly. Virality can lift you, distract you, or mislead you. What matters most is the foundation you build before the spike and the choices you make after it.

Final Closing

A viral moment can change your month. A real brand can change your life. Build the one that lasts.

At its best, the holiday still carries those same themes, survival, resilience, gratitude, and the people who support us along the way.

This year, I feel that more than ever.

How I Spend Thanksgiving

Thanksgiving at our house has turned into a full family tradition. Here is what it usually looks like.

• Friends and family fill our home and the day quickly becomes loud, warm, and familiar.

• My kids and I watch football all day while eating pepperoni, various cheeses, and crackers, our unofficial Thanksgiving appetizer.

• My sister and her kids make the drive, and my mother in law always joins us (and yes, I make her carve the turkey but it is a long story).

• Laurie spends days planning and preparing the meal. She cooks turkey, makes two types of stuffing, corn souffle, sweet potatoes with marshmallows, a vegetable, and a running list of desserts supplied by our guests.

• There is always plenty of red wine, plenty of eating, and plenty of football. It is simple and perfect.

Thanksgiving for us is exactly what the holiday represents, comfort, connection, and being surrounded by the people who matter.

What I Am Thankful For

1. My health

My weight loss journey started in early 2024. It changed so much about how I feel. I have more energy and more clarity, and it helped me enjoy golf throughout the year. I am hitting the ball longer and more consistently and my handicap is at its low. I have overcome numerous back and neck injuries and hopefully carrying less weight will also help me there. It feels good to feel good and I am grateful for the work that got me here.

2. My family

I am incredibly thankful for Laurie, for our marriage, for the life we built over thirty two years, and for the way she supports me. She lets me be me. She never complains about how hard I work and she takes pride in what my career has created for our family. I know how lucky I am.

Our kids continue to make us proud.

• Hallie works in marketing in the beauty industry and recently started at elf, a company I truly admire. It is great to see someone chase a passion working in beauty and finding such an amazing opportunity.

• Tyler started in investment banking and now works at DraftKings. It is great to see someone chase a passion working in sports and finding such an amazing opportunity.

Both of them reflect the worlds that shaped my own path in finance and beauty, and the apple truly does not fall far from the tree.

I am also thankful for my sister. She overcame real obstacles to become a successful business entrepreneur, she raised two successful kids, and she did it with grit, resilience, and love. Both of us learned those traits from our mother, who passed over twenty years ago now at such a young age.

I am equally grateful for my mother in law, whose energy and independence at her age truly inspire all of us.

3. My career

I have spent more than two decades in private equity, mostly in consumer and beauty, and I feel grateful every day for the opportunities the industry has given me. I have never worked harder or had more fun. As I pointed out in an earlier substack post, I am grateful for Chip Baird who early in my investing career, strongly urged me to focus on the beauty industry. Building True Beauty Ventures with Cristina has been one of the most rewarding chapters of my long career. Creating a firm from the ground up and watching it grow into something meaningful has been an incredible experience.

4. TBV and the community around it

People often ask how Cristina and I met. The story goes back many years.

• We first worked together at Catterton when I was a partner and she was an associate.

• She later joined me as a senior associate at Tengram Capital.

• After that, she moved into her first operating role at Laura Geller, a beauty brand in the Tengram portfolio.

• She encouraged me to start my own fund as early as 2017. I was not ready until 2020.

I am grateful she planted that seed. I am even more grateful that she joined me on this journey. She needed to be given the opportunity and a platform and TBV gave her one. Watching her rise and absolutely crush it has been one of the most meaningful parts of this experience.

I am thankful for the entire TBV team.

• Caroline, who stalked me in the best possible way to become an intern and then our first employee. Her transition from consulting to investing has been almost seamless, fueled by her passion for beauty and her drive to learn every detail of this industry. She keeps the TBV trains running and she has not missed a beat in spite of motherhood and the more important responsibilities she now carries. We would not be here without her.

• Phipps, who let us drop her first name (also Caroline for those that did not know this!) to avoid confusion and embraced her investing role with the confidence and skill I knew she had the moment I met her (she was the sell side analyst on the sale of NEST to North Castle). I am so glad she decided to join us.

• Mac, who made the leap from Chanel back into the finance and investing world. I am thankful that our first slate of candidates did not work out because it allowed us to meet her and to hire her, even though she had to give up quite a nice employee discount at Chanel.

This amazing team of women are just getting started and I am so excited for our future. I wish the entire TBV team a wonderful Thanksgiving and hopefully a long, relaxing, almost work free weekend.

I am thankful for our founders and executives, people who trust us with their brands and inspire us every day.

I am thankful for our LPs, many of them close friends, who believed in us early and helped us build this firm.

I am thankful for the broader beauty community, which embraced our strategy and gave us the platform to build our brand and business.

A closing thought

Thanksgiving asks you to slow down, look around, and acknowledge the good. When I do that this year, I see a life filled with purpose. I see health, family, and a career that energizes me. I see a firm I helped build and a partner who pushed me to dream bigger. I see a team that believed in us, founders who inspire us, and a community that welcomed us.

Most of all, I see how fortunate I am. Gratitude hardly captures it.

Lucky me.

P.S. I hope your Thanksgiving is filled with good food, good company, and a little football in the background. Thanks for reading and for being part of this growing community. I appreciate every one of you.