Venture capitalists are ramping up their efforts to create dedicated funds for investing in K-beauty startups, driven by the rising popularity of South Korean cosmetics in the United States and Japan. The growing interest in Korean-style makeup, driven by the K-pop phenomenon, is also reflected in stock market trends, prompting venture capitalists to focus on K-beauty investments.
On July 22, the VC industry reported that Korean venture capital firm Mark & Company recently launched a dedicated fund to support K-beauty startups and train professionals. The fund aims to raise about 10 billion won and has already secured over 8 billion won from private investors.
In late 2023, Shinsegae Group’s corporate VC, Signite Partners, formed the Shinsegae-KDBC Atelier Investment Association, a 56 billion won fund dedicated to K-beauty and K-fashion. This fund, co-managed by KDB Capital, is the first in Korea.
Large Korean VC firms manage blind funds, deciding where to invest after raising capital and prioritizing K-beauty. Atinum Investment, which launched Korea’s largest venture fund with 860 billion won in September 2023, selected K-beauty startup Craver Corporation as its first investment.
The focus on K-beauty by VCs is attributed to the current ‘second heyday’ of Korean cosmetics. Small and medium-sized indie K-beauty brands are gaining more popularity overseas than in Korea. These brands are particularly appealing to VCs due to their global scalability.
K-beauty initially gained attention in the mid-2010s, primarily targeting the Chinese market. While some exports reached Europe, major markets like the U.S. and Japan were largely overlooked. Additionally, the market was dominated by large companies such as Amore Pacific Corporation and LG H&H, limiting opportunities for VCs.
The recent K-beauty boom, however, is driven by small and medium-sized brands diversifying their exports beyond China. These brands have gained traction due to the popularity of K-pop. For instance, Atinum Investment’s Craver Corporation generates 90% of its sales from the U.S., Europe, and Southeast Asia.
