The world is changing – and fast. Beauty incubator program are on the rise. The COVID-19 pandemic only accelerated the speed in which businesses developed, emphasizing the importance of innovation and creativity. Over the last few years, companies have relied on newcomers to disrupt the business environment. All these factors combined have led to an increase in start-up interactions. According to an Arthur D. Little and MatchMaker Ventures survey, which included over 300 companies in multiple industries, 98% of corporates had worked with start-ups in some form.
Incubator programs are one of the key corporate-startup interactions that have taken center stage. Business incubators are programs that support the development of start-ups by providing them with support services. The goal of an incubator is to help small startups become successful and financially viable firms that can survive on their own.
The Role of Incubators in Beauty
Incubators, though mostly associated with the technology sector, also exists within the beauty industry. Beauty Independent has identified about 25 incubators that have launched within the beauty, personal care, and wellness space. One of these incubators is Deciem. Deciem had released many different beauty lines including hair restoration line Grow Gorgeous, haircare cleaning specialist HIF, body care brand Loopha and hand treatment provider The Chemistry Brand. However, their most successful company was The Ordinary.
The Ordinary revolutionized the beauty industry by offering ingredient-focused products and absolute transparency to consumers at extremely low prices. By the end of 2019, Business of Fashion reported that out of Deciem’s $330 million revenue, The Ordinary contributed 80%. This success story highlights some of the benefits beauty incubator programs offer for both startups and corporations.
For the startups, incubators help new entrepreneurs have a space to innovate with guidance from more experienced corporations. The support provided can range from financial investment to management support to networking opportunities. The larger corporations investing in these small companies can get a cut of revenue earnings due to their early investments. They also can create a pipeline of acquisition targets, as the smaller companies will be well acquainted with the larger company culture and systems.
Outside of the stakeholders in the beauty incubator relationship, these programs have the potential to benefit the larger business environment. Recently, Sephora announced the relaunch of their incubator programs. The program, which in its six-year history focused on supporting female founded brands across the world, is now turning its attention to BIPOC owned prestige beauty brands. The 2021 Accelerate program is offering these companies with support across many different areas. In addition to a Sephora-led curriculum and support, the founders will receive mentorship from industry veterans and exposure to investment firms and venture capitalists. Once the program is complete, all brands will launch their products at Sephora. Overall, Sephora is seeking to build a pipeline that supports long-term success of BIPOC-owned businesses and better the industry at large.
Starting an Incubator Program
Regardless of the company goal, to increase innovation or support diversity in the industry, an incubator program could be a good company option.
To start an incubator program, you must have a strong value proposition. Incubator programs have grown in popularity, which means the market is getting saturated. To distinguish yourself, you need to define the goals and focus of your program. Once you have decided upon the incubator program’s unique offerings, you will have a better idea of which types of people or companies you want to recruit.
Next, you will need to find the incubator model that best suits your company. The incubator model you select will be based off three main criteria. The first is what stage of the process in which you want to help entrepreneurs. These stages include the pre-idea stage, idea stage, existing business, or post-investment stage. You also will need to think about the support required by your target entrepreneurs. Students will likely need different resources than existing employees in the company. Additionally, resources will differ based on experience. Some incubators help younger entrepreneurs start their first businesses while others are focused on helping committed individuals who have a keen interest on becoming founders as their next career move. Finally, you need to determine how long your incubator program will help the startups. The time can range from 3 months to over a year. This will likely depend on how much resourcing and funding you have to invest in your program.
Answering these questions will lay the groundwork for you to launch a strong incubator program. However, there are common pitfalls that can hurt the new program. The key to a great incubator program is for companies to truly keep these incubators separate from the rest of the business. If funding allows, you should consider setting up a separate division that will be singularly focused on the burgeoning companies. They should be separate in every way from the ‘mothership’ with unique systems, processes, and email addresses. Without these guardrails, it is impossible to maintain the cultural elements and mindset you want in an incubator – most importantly, that it is okay to fail. By fostering a collaborative, creative, and safe workspace for your entrepreneurs is the best way to ensure that the end goal is reached: to launch successful companies that can survive on their own.
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Coauthor and contributions by Maggie Wong