Estée Lauder, Shiseido, and L'Oréal Betting on Beauty Tech

The global beauty industry is investing heavily in its future, with projections showing the market will grow 6–8% annually until 2030. This remarkable growth is happening during a period of significant digital transformation, as beauty giants recognize that e-commerce now represents a quarter of the market.

Why are L'Oréal, Estée Lauder, and Shiseido betting big on beauty tech startups? The answer lies in the numbers. L'Oréal SA has experienced robust revenue growth of 34.7% from 2021 to 2024, reaching $49.43 billion, with approximately 28.2% of this revenue now coming from e-commerce. Meanwhile, the global cosmetic market, valued at $385.82 billion in 2023, is projected to reach $852.72 billion by 2033. Clearly, technology and innovation are reshaping how beauty brands connect with consumers.

We're witnessing a fundamental shift as these beauty powerhouses move beyond traditional anti-aging approaches to embrace biotech-fueled skin health as beauty's next frontier. In fact, both Estée Lauder and L'Oréal have launched longevity-focused innovations, signaling a strategic pivot toward what industry experts call "pro-vitality". This isn't casual collaboration anymore – it's a complete strategic overhaul that's redefining the future of beauty.

In this article, we'll explore how L'Oréal, Estée Lauder, and Shiseido are leveraging venture funds and startup investments to accelerate innovation and secure their positions at the forefront of beauty's technological revolution.

Why beauty giants are turning to startups

Beauty giants face a pivotal challenge in today's market — innovation speed. Traditional beauty corporations are discovering that internal research and development alone can no longer keep pace with rapidly evolving consumer demands and technological advancements.

The limits of traditional R&D

The established product development cycle at major beauty conglomerates typically spans from 12 months to three years. This extended timeline creates significant vulnerability in a market where consumer preferences shift rapidly.

Additionally, regulatory changes like China's Cosmetics Supervision and Administration Regulation and the U.S. Modernization of Cosmetic Regulation Act (MoCRA) have introduced mandatory safety assessments and extensive documentation requirements, further complicating the innovation process.

Increased compliance costs are another limiting factor. Traditional manufacturers now face higher expenses for quality assurance systems, particularly as MoCRA establishes more stringent Good Manufacturing Practices. The beauty industry's conventional approach relies heavily on lengthy product journeys involving complex collaborations between multiple departments and outside partners1—a process that has become increasingly unwieldy.

How startups bring speed and agility

In contrast, beauty startups excel at nimble innovation. Fast-beauty companies can introduce trend-led products every couple of weeks while maintaining competitive pricing. This agility stems from their implementation of short, iterative development phases or "sprints" that enable rapid testing, feedback, and adjustment.

L'Oréal's Chief Executive Nicolas Hieronimus acknowledged this advantage when he stated, "We believe that tech can push the boundaries of what's possible, help us improve the lives of consumers around the world, and cater to the infinite diversity of beauty needs and aspirations of every individual".

Startups are particularly valuable in pioneering specialized technologies. For instance, emerging companies are leading innovation in precision skincare, using advanced diagnostics, AI, and machine learning to create truly personalized solutions — capabilities that would take traditional R&D years to develop internally.

The role of CVC in beauty's digital future

Corporate venture capital has emerged as the strategic bridge between established beauty giants and innovative startups. L'Oréal's BOLD (Business Opportunities for L'Oréal Development) fund exemplifies this approach, making targeted investments in brands, technology, biotech, and green science. Their investment in Digital Village, a metaverse-as-a-service platform, marks L'Oréal's first venture capital investment in the metaverse and Web3 space.

Similarly, Shiseido launched LIFT (Long Term Investments for the Future) Ventures to invest in early-stage beauty and wellness startups outside Asia. These investments allow beauty corporations to access cutting-edge technologies without bearing the full risk and development costs.

Through these strategic partnerships, beauty giants gain both innovation acceleration and competitive intelligence. 

L’Oréal’s venture playbook: BOLD and beyond

As beauty industry veterans shift toward technological innovation, L'Oréal stands at the forefront with its sophisticated venture investment strategy. Unlike traditional corporate investments, the French beauty giant has created a multi-pronged approach that combines direct funding with collaborative innovation ecosystems.

Photo Source: lorealboldventures.com

What is L'Oréal BOLD?

BOLD (Business Opportunities for L'Oréal Development) represents L'Oréal's strategic corporate venture fund established in 2018. The fund targets investments across four key domains: brands, digital beauty, innovative retail, and technology. Essentially, BOLD functions as L'Oréal's financial arm for backing promising startups while gaining early access to disruptive technologies.

According to Barbara Lavernos, Deputy CEO at L'Oréal, "BOLD allows us to connect with emerging technology ecosystems to identify potential disruptors early and form strategic partnerships that complement our internal innovation efforts."

The fund typically invests between €500,000 and €10 million per startup, focusing on minority stakes that enable portfolio companies to maintain their entrepreneurial independence while benefiting from L'Oréal's global reach.

Notable investments in tech-driven startups

L'Oréal's investment portfolio reveals its strategic priorities across the beauty tech landscape:

• Digital Village: In 2023, BOLD made its first metaverse investment in this platform that helps brands create virtual experiences and digital assets

• Sparty: A Japanese D2C personalized beauty brand specializing in on-demand customization

• Replika Software: A social selling platform enabling brand advocates to sell products through social channels

• Gjosa: A Swiss environmental tech company that developed water-saving shower technology, reducing water consumption by up to 65%

Moreover, L'Oréal acquired ModiFace in 2018, a startup specializing in augmented reality and artificial intelligence for the beauty industry, subsequently integrating this technology across its brands.

Open innovation through Station F and Founders Factory

Beyond direct investments, L'Oréal fosters innovation through strategic partnerships with startup accelerators. At Station F, the world's largest startup campus located in Paris, L'Oréal operates a dedicated beauty tech accelerator supporting early-stage companies.

Concurrently, L'Oréal collaborates with Founders Factory, a London-based accelerator and incubator. Through this partnership, the beauty giant has co-created several startups, including InsitU, a personalized skincare brand, and Preemadonna, which developed the Nailbot, a device that prints art directly onto nails.

"Our goal is not just financial returns," explains Gouzelle Ishmatova, Chief Strategy Officer for BOLD. "We seek strategic value through early access to emerging technologies and business models that could fundamentally transform the beauty industry."

Estée Lauder’s evolving innovation strategy

Estée Lauder Companies has quietly revolutionized its approach to innovation, shifting from relying solely on internal development to embracing strategic investments in external startups and technologies.

Photo Source: trbusiness.com

Estée Lauder venture fund overview

Though newer to the corporate venture capital space than some competitors, Estée Lauder has established a structured investment approach focusing on early-stage beauty tech companies. Their venture strategy emphasizes three core priorities: enhancing consumer experiences, accelerating digital transformation, and pioneering sustainability solutions.

Unlike traditional venture funds seeking primarily financial returns, Estée Lauder's investment philosophy centers on strategic value creation. They typically take minority stakes in promising startups, allowing these companies to maintain their entrepreneurial spirit while gaining access to Estée Lauder's global resources, distribution channels, and industry expertise.

"We don't just invest capital — we invest expertise," explains Dennis McEniry, former President of Estée Lauder Online. "Our goal is creating mutually beneficial partnerships that accelerate innovation for both parties."

Strategic partnerships with fashion and tech brands

Beyond direct investments, Estée Lauder has forged strategic alliances with fashion houses and technology companies. These collaborations enable the beauty giant to tap into complementary expertise without the full commitment of acquisition.

Estée Lauder's partnership approach focuses on:

• Technology integration: Implementing AI-powered skin analysis tools across their brand portfolio

• Omnichannel experiences: Creating seamless consumer journeys between physical and digital touchpoints

• Sustainability initiatives: Collaborating with green chemistry startups to develop environmentally-friendly formulations

Furthermore, these partnerships often serve as testing grounds before deeper investment. By piloting technologies through limited-scope collaborations, Estée Lauder can evaluate potential before committing substantial resources.

Notable investments

The company's investment portfolio reflects its strategic priorities across beauty tech. Specifically, Estée Lauder has backed companies pioneering personalized skincare, augmented reality applications for virtual try-on experiences, and sustainable packaging solutions.

Though keeping many investments confidential, Estée Lauder has publicly backed several notable startups. These include companies developing skincare formulation technologies, AI-powered personalization platforms, and direct-to-consumer beauty brands with innovative business models.

Overall, Estée Lauder's evolving innovation strategy represents a fundamental shift in how established beauty companies approach technology adoption. Rather than viewing startups as competitors, they now recognize them as vital innovation partners — accelerating digital transformation across the entire organization.

Shiseido’s tech-forward transformation

Japanese beauty powerhouse Shiseido is executing a bold pivot toward tech-driven innovation, positioning itself as an agile player in beauty's digital future. Unlike its Western counterparts, Shiseido brings a distinctive East-meets-West approach to investing in beauty's next frontier.

Photo Source: fashionnetwork.com

Shiseido's innovation strategy in Asia and beyond

At the core of Shiseido's transformation is its "WIN 2023 and Beyond" strategy, emphasizing digital acceleration across all business aspects. The company has established innovation hubs strategically positioned in global tech hotspots — Tokyo, Shanghai, and Boston — creating a transcontinental innovation network.

Masahiko Uotani, Shiseido's CEO, emphasizes this approach: "Our innovation centers serve as radar systems, detecting emerging technologies and consumer trends across key markets. This allows us to quickly identify and integrate promising innovations."

The strategy is yielding measurable results. Consequently, Shiseido's e-commerce sales now represent approximately 35% of total revenue, signaling successful digital transformation efforts. The company has also launched several tech-powered products, including its Optune personalized skincare system that analyzes skin conditions through a smartphone app.

Shiseido LIFT Ventures

Launched in 2023, LIFT (Long-term Investments for the Future) Ventures represents Shiseido's formal entry into corporate venture capital. Unlike traditional investment vehicles, LIFT focuses exclusively on beauty, wellness, and health startups at seed to Series A stages.

What sets LIFT apart is its dual-geography approach, investing primarily in North American and European startups to complement Shiseido's strong Asian presence. The fund typically invests between $1-5 million per startup, taking minority stakes to preserve entrepreneurial culture.

Presently, LIFT targets three specific domains: personalized beauty technologies, sustainable packaging innovations, and bioactive ingredient platforms—all aligned with Shiseido's long-term strategic vision.

Biotech and longevity-focused notable investments

Biotech represents the crown jewel in Shiseido's investment strategy. Hereafter, the company has made strategic investments in several cutting-edge startups, including Jiangsu Trautec Medical Technology, a Chinese biotech firm specializing in medical esthetic technologies.

Regardless of geographic location, Shiseido prioritizes science-backed approaches to beauty. Their investment in Second Genome, a microbiome research company, demonstrates their commitment to next-generation skincare solutions built on gut-skin axis research.

"Longevity science represents the future of beauty," notes Yoshiaki Okabe, Chief Innovation Officer. "Through strategic investments in biotech startups, we're accessing breakthrough technologies years before they would otherwise enter our innovation pipeline."

Conclusion

The beauty industry stands at a pivotal crossroads where traditional cosmetics meet cutting-edge technology. Undoubtedly, the strategic pivot toward startup investments represents more than just financial maneuvering—it signals a fundamental transformation in how beauty giants approach innovation.

L'Oréal, Estée Lauder, and Shiseido have recognized that internal R&D alone cannot match the pace of consumer demands and technological advancement. Therefore, these companies now treat startups not as competitors but as essential partners in their growth ecosystem. This collaboration model delivers dual benefits: beauty giants gain access to agile innovation while startups receive the resources and market reach they need to scale.

The distinct approaches of each company — L'Oréal's multi-pronged BOLD strategy, Estée Lauder's strategic partnerships, and Shiseido's transcontinental LIFT Ventures — all share a common thread: betting on personalization, sustainability, and digital experiences as beauty's future cornerstones.

Perhaps most significantly, these venture strategies represent a shift from traditional product-centric thinking toward experience-driven beauty solutions. Accordingly, as biotech and AI continue reshaping consumer expectations, the beauty corporations that master the art of startup collaboration will likely emerge as industry leaders.

Rather than viewing technology as merely supportive of beauty products, these industry titans now see tech as the catalyst for entirely new beauty paradigms. Though challenges remain in balancing corporate structure with startup agility, the beauty tech revolution has clearly moved beyond experimentation into strategic necessity.

After all, as consumers increasingly expect personalized, sustainable, and digitally-integrated beauty experiences, the future belongs to companies that can seamlessly blend cosmetic expertise with technological innovation. The beauty giants' venture funds are not just preparing for this future—they're actively creating it.

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FAQs

Q1. Why are major beauty companies investing in tech startups? 

Beauty giants are investing in tech startups to accelerate innovation, gain access to cutting-edge technologies, and stay competitive in a rapidly evolving market. This strategy allows them to overcome the limitations of traditional R&D cycles and respond more quickly to changing consumer demands.

Q2. How is L'Oréal approaching beauty tech investments? 

L'Oréal has established BOLD (Business Opportunities for L'Oréal Development), a strategic corporate venture fund that invests in brands, digital beauty, innovative retail, and technology startups. They typically invest between €500,000 and €10 million per startup, focusing on minority stakes to maintain entrepreneurial independence.

Q3. What is Shiseido's strategy for beauty tech innovation? 

Shiseido has launched LIFT (Long-term Investments for the Future) Ventures, focusing on beauty, wellness, and health startups at seed to Series A stages. They invest primarily in North American and European startups to complement their strong Asian presence, targeting personalized beauty technologies, sustainable packaging innovations, and bioactive ingredient platforms.

Q4. How is Estée Lauder adapting its innovation approach? 

Estée Lauder is shifting from solely internal development to embracing strategic investments in external startups and technologies. Their venture strategy focuses on enhancing consumer experiences, accelerating digital transformation, and pioneering sustainability solutions. They typically take minority stakes in promising startups, allowing them to maintain their entrepreneurial spirit while gaining access to Estée Lauder's global resources.

Q5. What are the key areas of focus for beauty tech investments? 

Beauty tech investments are primarily focused on personalization technologies, AI and AR applications, sustainable and eco-friendly solutions, biotech and longevity science, and digital experiences that bridge the gap between online and offline shopping. These areas are seen as crucial for the future of the beauty industry and meeting evolving consumer expectations.