Ulta Beauty enters metaverse movement with digital innovation fund for beauty start-ups

05 Aug 2022 --- US beauty retailer Ulta Beauty has spearheaded Prisma Ventures, a digital innovation fund set to invest US$20 million in emerging technology start-ups that seek to shape future online and in-store experiences.

With this fund, the company aims to unlock new technology that fuels greater discovery, personalization and convenience. “We believe this fund presents opportunities for creative disruptors to further propel the industry forward,” remarks Prama Bhatt, the chief digital officer of Ulta Beauty.

The company sets out to build lasting relationships with start-ups, and welcome them into its ecosystem. 

“This will enable both parties to co-create and experiment in ways that tap into each other’s expertise and ultimately leverage resources that can invent, and re-invent, where the retail and beauty industry is heading and what the future of this sector will look like,” states Ulta Beauty.

Scaling early-stage beauty entrepreneurs
Prisma Ventures works with early-stage entrepreneurs – especially Series Seed and Series A technology firms – in innovation pillars, such as personalized and data-driven technology, augmented reality, virtual reality, the metaverse, technology-powered custom beauty products and in-store services, and social commerce.

These pillars, which account for the majority of Prisma Ventures’ investments, match Ulta Beauty’s digital innovation goals and growth strategy, notes the company.

“Additional capital will be used to fund opportunistic innovations that aim to disrupt other aspects of retail, beauty or commerce beyond the company’s core digital strategy,” it details.

Networking in the beauty business
In addition to monetary investment, Prisma Ventures gives the start-ups access to the retailer’s extensive experience and resources.

Fund members will have access to Ulta Beauty’s innovation team, consumer data, and in-market testing possibilities to optimize solutions.

Prisma Ventures has collaborated with and funded a range of start-ups since its debut at Ulta Beauty's 2021 investor day, including Haut.ai, Adeptmind, Revea, LUUM and ReStyle.

These investments have so far allowed more personalization and diagnosis inside Ulta Beauty’s digital skin and hair experiences.

“The corporation does not plan for every investment to have an immediate influence on its offerings, but where synergies exist, the partners will collaborate to bring innovation to the market,” notes Ulta Beauty.

Re-iterating collaboration
Jon Nordmark – co-founder and CEO of Iterate.ai – says that the investment provides an opportunity to test, learn, deploy and scale Iterate’s low-code AI innovation platform, in addition to adding to Iterate’s credibility.

Iterate, partnered with Ulta Beauty, operates in the development of AI-driven enterprise solutions using modular, low-code components in a simple drag and drop environment.

Elaborating on the partnership, Nordmark says: “The collaborative spirit has been a constant throughout our six-year relationship which grew from a small agreement in 2016 into an eventual investment. Together, we’re pushing the industry forward with AI-, AR- and IoT-related innovation.”

Critical evaluation
The Ulta Beauty Prisma Ventures team will evaluate candidates using five areas of criteria.

First, alignment with a focus area, meaning businesses that adhere to Ulta Beauty’s four major innovation pillars. Leadership and cultural competence – the managerial experience, execution skills, and cultural fit of the startups to enable effective collaboration.

Due diligence and risk assessment is another area of criteria, in which completion of due diligence across legal, technical, and business functions stand primary. 

The start-ups’ scalability and business plans will be evaluated too, where their value proposition strength, vision and financial goals strategies will be assessed. 

Finally, differentiation and intellectual property, including patents, competencies and novel technologies.

Supporting startups in the beauty industry
In similar developments, Nykaa and Estée Lauder have jointly spearheaded Beauty & You India, a competitive program that supports Indian beauty and personal care start-ups. The competition offers the awardees masterclasses, financial support, mentorship, press coverage and distribution support in much the same way as Prisma Ventures.

Shana Randhava, the VP of the Nykaa division responsible for the development of this program, explains that the aim of it is to “harness the entrepreneurial energy in India to advance next-generation beauty brands by presenting opportunities that help put brands on a long-term, sustainable growth path.”

Beauty & You India aims to do this by encouraging start-up founders to identify brand goals, achieve scale ambitions, and curate product portfolios that speak to a new generation of consumers in the Indian market.

Reward recipients will “gain an insider’s view of what it takes to build iconic, sustainable beauty brands from leading global experts,” the companies claim.

By Mieke Meintjes