Beauty investment is back, but investors are no longer rewarding growth for growth’s sake. They want evidence that growth is high-quality, sustainable and capable of generating cash.
Growth capital investment in the global beauty sector increased 92.2% in the first half of 2026, but investors are becoming more selective about the businesses they are willing to back.
Speaking at Beautyworld Dubai as a panel moderator, BeautyMatter president and co-founder John Cafarelli said the rise in growth capital reflected longer-term confidence in the sector, but warned that “the bar for investment has never been higher”.
Investors are assessing the quality of growth, including gross margins, repeat purchases, EBITDA, customer acquisition and whether a business can ultimately become sustainable.
Cafarelli said: “Growth capital is inherently very forward. Investors aren’t simply buying businesses based on historical results. It means that they’re underwriting what they believe those businesses will become over the next 2 -10 years. Capital may be coming back, but the bar for investment has never been higher.”
He noted that investors are now looking at factors including differentiation, credible economics, sustainable customer acquisition and whether a business can ultimately become sustainable.
Stefano Curti, private equity investor and board chairman at Dossier, said investor priorities had shifted from the speed of growth to its quality.
He said: “Five years ago, it was primarily about growth. Focus on growth first, and then we’ll figure out the profitability. Today I think the question is more how good the growth is.”
Curti said quality of growth included gross margins, repeat purchases, EBITDA and access to distribution.
He noted: “So, if before growth generated the value, today it’s more about the quality of growth that generates the valuation.”
He said investors were not necessarily looking for businesses that were already profitable, but wanted evidence that their underlying models were sustainable and capable of supporting further growth.
“We’re not looking to buy profit. However, a profitable company means that the model is repeatable. So there is a sustainable model for the company.”
Curti said investors were also looking at whether consumers were demanding a brand and whether retailers and content creators were actively seeking to work with it.
He emphasised: “We want to have growth that generates cash versus growth that needs cash.”
He said one way of testing the resilience of a business was to consider what would happen if its marketing spend was reduced.
“A key question that I often ask an operator is: what happens if I take away 30% of your spend? And then you will see how resilient the growth in their mind would be.”
The investment market is also expanding beyond traditional beauty categories. Cafarelli said capital was moving into areas including oral care, scalp health, sleep, longevity, diagnostics, biotechnology and AI.
He said investors were instead asking what consumer need a product or brand solved and whether it changed how people “look, feel, age, or care for themselves”.
Curti said changing consumer behaviour was also making traditional distinctions between mass, prestige and luxury less relevant.
“Loyalty to price tiers has disappeared. There was a time when you were a prestige consumer, a mass consumer, and that differentiation doesn’t exist.”
He also said consumers had become more informed and sceptical of marketing claims, adding that “efficacy is the new luxury.”
The changing investment environment is also creating opportunities for Middle Eastern beauty brands, according to Ahmad Shamieh, general partner at Homegrown Ventures. He said investment activity in the region was increasing, but investors were applying greater scrutiny to the fundamentals of businesses.
“There is interest in beauty. There is money being picked there, but it’s not dealing at companies with the right foundation, with the right concept and proof of market before they support and invest.”
Shamieh said brands should establish a strong position in their home market before attempting international expansion.
He noted: “If you’re able to build the market share, build sales, get profitable in the market, then you’re definitely doing things right. That playbook you are creating then is ready to be taken outside to the next big market.”
Curti said Middle Eastern brands could build global businesses without diluting their regional identity. He noted that investors would look for differentiation and evidence that a brand could translate successfully into international markets.
Both investors also stressed the importance of having a strong product behind consumer awareness, including for celebrity-led brands. Curti said celebrity could accelerate awareness but was not sufficient to create long-term value.
He said: “It’s great for a celebrity to accelerate awareness, but then you have to build a product that deals with it.”
The panel also discussed product ranges, with Curti arguing that new brands should focus on establishing a hero product before expanding into a full range. Shamieh agreed, warning that businesses generating $1m to $2m in revenue while carrying 100 SKUs could raise concerns for investors. Curti added that expanding from a successful hero product into adjacent categories could then provide an opportunity for the next stage of growth.
The BeautyMatter Deal Index recorded 156 beauty transactions globally in the first half of 2026, up 32.2% year on year, with growth investments increasing 92.2%.
