Vegan K-beauty brand Dear Dahlia is seeking to raise $3.7 million (5 billion won) in new funding, according to sources in South Korea’s investment banking sector on Feb. 15. Dear Dahlia is planning to prepare for an initial public offering (IPO) after securing additional funds.
Baram International, the cosmetics company behind Dear Dahlia, recently launched a new round of funding. The company is in talks with Korean beauty giant Amorepacific and leather goods maker JS Corporation for additional investment. The goal is to issue new shares worth 5 billion won, targeting a company valuation of 100 billion won.
This funding round serves as a bridge between bigger funding rounds, according to people familiar with the matter. Baram International raised 16.5 billion won during a series-C round of funding led by JS Corporation, Kolmar Korea and Marker Apparel in 2022. Amorepacific participated in a series-A round of funding in 2018.
Total investments amount to 42.5 billion won. Baram International chief executive Park Rae-hyun is the largest shareholder with a 39.52% stake, and financial investors LB Investment and Smilegate Investment are also major shareholders.
Founded in 2014 as a marketing agency, Baram International launched Dear Dahlia in 2017, a few years after marketing K-beauty brands online. Instead of following K-beauty’s emphasis on skincare, Dear Dahlia opted for vegan cosmetics focused on make-up.
Dear Dahlia paved the way into France in 2019, opening a stand-alone store in Galeries Lafayette, a high-end department store in Paris. The brand operates 300 stores worldwide, including in Italy, Germany and the U.S.
But Dear Dahlia’s sales took a hit during the covid-19 pandemic as demand for make-up fell as more people wore masks. The brand’s sales plummeted from 61.9 billion won in 2020 to 36.6 billion won in 2021 and declined to 20.1 billion won in 2022.
Operating losses also widened as the brand increased advertising expenditures to boost sales. The company’s operating loss increased from 7.8 billion won in 2020 to 12 billion won and 11 billion won in 2021 and 2022, respectively. As performance weakened, rumors that Baram International was considering the sale of a majority stake in the company took hold last year.
But Baram International denied such rumors, stating that the company intends to use the 5 billion won bridge investment to bolster its international sales channels. The company is witnessing a rebound in the demand for make-up post-pandemic.
“Sales have doubled last year, and we are making strides in the Middle Eastern markets such as the UAE and Saudi Arabia,” said a Baram International spokesperson. “Once we return to profitability this year, we will prepare for an IPO.”
