Oddity, the parent company behind DTC makeup brand Il Makiage, has secured a $130 million secondary-market private round at a valuation of $1.5 billion as it seeks to diversify its investors and expand its business model.
On Monday, Oddity announced billionaire entrepreneur Thomas Tull, investment firm Franklin Templeton, Fidelity Management and First Light Capital Group as new investors. Up until now, private equity group L Catterton has been the only outside investor in the business, investing $44 million since 2017. Oddity is not issuing new shares as a secondary fundraise; instead, L Catterton and its founders sold 8% of their ownership of the company. L Catterton had a 35.8% stake in the business. Oran Holtzman, CEO and co-founder of Oddity, said he wanted to diversify the company’s investors to bring in additional expertise, but he declined to elaborate. He noted that L Catterton did not ask to sell its shares and that it was a strategic business choice for Oddity.
In Dec. 2020, Holtzman confirmed that Il Makiage had contracted Centerview Partners and Goldman Sachs to explore deal options, including a potential sale of an initial public offering. Holtzman declined to provide updates on the IPO or sales plans. Il Makiage reported $260 million in 2021 revenue and is profitable. Oddity plans to launch a new brand every 18 months, said Holtzman. It will start with the launch of a second brand called SpoiledChild in the wellness space in February, followed by an undisclosed telemedicine brand in 2023.
“[L Catterton] invested early stage, and they believe in the company and our vision. But as we scaled and as we think about our future, it was important for us to add more blue-chip later-stage investors,” said Holtzman. “The sole goal of this raise was to diversify our cap table and add a selected group of high-quality investors to join us to the next chapter of the company.”
Il Makiage and Oddity’s vision has been clear from the beginning, relying on technology to push the bounds of online DTC sales. For example, it boasts a foundation-matching system for its 50 shades with a 90% accuracy. Holtzman said the brand has over 1 billion data points collected from 25 million website visitors. And Oddity’s scooped up tech brands like machine-learning firm NeoWize in 2019 and, more recently, AI-based computational imaging company Voyage81 in Aug. 2021. Oddity states that over 40% of the company’s 200 employees are part of its technology team. Oddity is headquartered in New York City and operates an R&D center in Tel Aviv, Israel.
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“[Our tech] is why we’re aiming to continue this massive growth. Although Covid-19 was a headwind for color cosmetics, we have continued to perform [well],” said Holtzman. “We prove that, with superior product and technology, [DTC online] can be profitable.”
He added that he does not foresee Il Makiage entering retail, given its strong performance so far. He said he sees DTC brands enter retail when they need scale and cannot grow enough online to offset online losses. Or, they use it to add distribution or for “last-mile [delivery] efficiency.” Il Makiage hosted global pop-ups for brand awareness in 2018.
Aside from the launch of SpoiledChild and any potential IPO or sale plans, Il Makiage is focusing on global expansion. Holtzman declined to comment on which countries it will focus on, but Il Makiage already sells within the U.S., Canada, the U.K., Germany and Australia. Holtzman said 75% of the brand’s sales are from the U.S., noting the huge growth potential abroad.
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“I am forever enthralled by companies that have the foresight to harness the power of technology and digital analytics. [They’re able] to truly understand their consumer base and to create new products and innovations that not only fill voids but also revolutionize industries,” said Tull. “Oddity is an excellent example of this kind of organization. Its capabilities and technology applications expand well beyond the beauty and wellness industry.”
