Investing in Tail winds: The Rise of Salicylic Acid 1

Investing in Tail winds: The Rise of Salicylic Acid

Private Equity and other investors who follow tailwinds consistently disproportionately out perform the market.

And so, in our Tailwinds series with the use of two platforms covering surging categories (Exploding Topics) and rapid company identification using AI (Inven.AI), we’re going to attempt to rapidly identify (i.e. please give us some slack…) early stage skincare growth brands in a surging niche.

In this case, we are going to go with skincare brands who use Salicyclic acid in their skincare range that are would appear outwardly ripe for external investment to fuel the next phase of their growth.

But firstly – as we all know – Skincare trends come and go, but the recent surge in popularity of salicylic acid-based products is grounded in the compound’s remarkable efficacy for various skin concerns.

Salicylic acid, a beta-hydroxy acid (BHA), has long been a staple in the treatment of acne. It can penetrate oil-laden pores and exfoliate the skin intrinsically.

Its growing presence in skincare regimens is a testament to its versatility, proving beneficial for many beyond those with acne-prone skin.

The widespread adoption of salicylic acid can be attributed to the broader understanding of its skin-rejuvenating effects. Beyond acne, it addresses issues like blackheads (remember them!), dullness, and uneven texture.

Consumers are finding that salicylic acid products can be a formidable ally for a clearer and more radiant complexion and an analysis of the rising search volume confirms that with search up +2225% over a five year period.

Global Search Volume: Salicylic Acid Serum

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That’s massive category “tailwind” growth and with a further search volume growth (read: consumer interest) of 18% predicted for the next 12 months means this ingredient is looking on trend…

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Source: explodingtopics

So there you have it, a bona fide niche trend in a booming category with further growth expected.

AKA a tail wind….

Key Takeaways

  • Salicylic acid’s popularity in skincare revolves around its multitasking ability to clear pores and promote skin renewal.
  • The incorporation of salicylic acid suits various skin types, signalling its broad appeal in personal skincare routines.
  • Search volume is in a surging growth phase confirming consumer sentiment and increasing awareness and demand for skincare products with this ingredient
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Image: The Salicylic Acid Compound. Nope, we don’t understand it either, but it makes the article look, ahem, more scientific and better researched…

Examples of Top Salicylic Acid Skincare Brands

Major skincare names such as The Ordinary, Naturium, and Neutrogena Oil-Free Acne Wash stand out as having a portfolio of successful salicylic acid products.

And this is particularly true for The Ordinary which is lauded for their transparent ingredient lists and no-frills approach, making them a go-to for skincare buffs who are prepared to queue for hours at their pop up events.

But you’ve missed your chance with them unless you’re an Elite Boutique as these brands have truly scaled internationally already.

But the beauty of the skincare (Ed: Very average…) industry is that, like Acne, new brands are popping up all the time.

So, if you want skin in the game (Ed: Genius!), read right on as we’re going to try and find you an (outwardly) appealing early stage brand with a developed range of salicylic acid skincare that is displaying positive signals of growth – but is pre-international scale and therefore MAY benefit from and be open to investment.

To do this we’re going to use Inven.AI who’s AI powered M&A screening helps you build lists in a tenth of the time it used to take.

And we’re going to do this very quickly so please judge us, not them, on the quality of the results…

Search / Investment Criteria

  • UK Headquartered (to make is easier)
  • Salicylic acid, Skincare Keywords
  • 5-50 Linkedin employees (not too big, not too small)
  • No VC or PE investment yet
  • Ai screening

After running this process through Inven, including using their AI filtering for rapid company identification, we boiled down to 23 potential brands within our criteria.

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Source: Inven.Ai

And after a human based skim through and a little fly-by of other sources including websites, TrustPilot reviews, Google News and UK Companies House we find our lead candidate, conveniently at the top – FaceTheory!

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Face Theory

Everything’s looking right for FaceTheory with upward trend in terms of brand related search, hirings and product expansion.

The only trouble is Active Partners got there first (well done guys, looking good!).

This doesn’t mean they’re out of the list, it’s just under our investment criteria we’d like to avoid brands already funded by a VC to see if we can spot a potential early home run.

So, it’s back into Inven on the hunt for other gems and within less than a minute we’ve found another potential shining light worthy of a bit of tire kicking.

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Source: Inven.Ai

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Balance Me

After a brief look around Balance Me things are looking good with their pleasant branding, on trend B-Corp certificate and pleasing recent positive press coverage with the mainstream UK Press, which is a good sign for such an early stage brand and modestly sized team.

So on that note we skip over to Companies House and initial thoughts are generally positive, be it from an unaudited return.

However, that being said, increases in cash in hand are usually a good thing when in ratio while swings in Debtor and Creditor levels would merit further understanding, we’d say Balance Me is very much looking like an investable brand under our Salicylic Acid tailwinds criteria.

And there’s another one we like – a lot!

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Madeby (formerly Made by Sunday)

Wow! We’ve got a bit of experience in brands and Madeby is punching!

Firstly, they have a very bold web design and mega strong in-your-face branding with a ethical ethos baked in.

On top of that they have a very ballsy range, great product reviews, and don’t get us started on leading with a – complimentary by recognition – dig at The Ordinary.

You’re just so cheeky Madeby!

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Then there’s the product names, with labels such as Not A One Night Stand and Basic B$tch we’d say they are on point with their demographic…and we frigging love it!

Now, on closer inspection, their 2023 return on Companies House looks a bit too small for most institutional investors with sub £100k type figures being more suited to an Angel Investor so, despite our initial enthusiasm, we’d have to put them on the watch list.

And that’s it on our Salicylic acid scouting trip!

Maybe not the smash-it-out-the park home run we wanted, but we’ve definitely identified two promising early stage brands with distribution potential who MIGHT be open to and benefit from investment.

So – if you believe in the power of tailwinds – and are actively investing in the UK skincare space we’d recommend you consider looking underneath the skin (Ed: Terrible…) of these two beauties.

Please note: None of the above is investment advice and all readers of Rainmakrr are considered to be experienced professionals capable of making far better financial calls than us…

Photo by Anna Nekrashevich

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