Ulta Beauty has formally launched its venture capital fund Prisma Ventures, which will invest $20 million in emerging technology startups that seek to shape the future of online and in-store retail experiences.
The digital innovation fund was first announced at the retailer’s Investor Day event in October 2021, and since then the fund has already made a number of investments in start-ups including Haut.ai, Adeptmind, Revea, LUUM and ReStyle. In fact, some of the new tech has already been deployed on Ulta’s platforms, enabling greater personalization and diagnosis within the company’s digital skin and hair experiences.
While Ulta doesn’t intend for every investment made by Prisma Ventures to directly impact its own retail offerings, “where synergies exist the partners will co-create to bring innovation to the market,” according to Ulta. All companies that receive investment from Prisma Ventures will also benefit from access to Ulta Beauty’s innovation team, consumer insights and in-market testing opportunities.
“We believe this fund presents opportunities for creative disruptors to further propel the industry forward,” said Prama Bhatt, CDO at Ulta Beauty in a statement. “We set out to build lasting relationships with startups, welcoming them into our ecosystem, co-creating and experimenting in ways that tap each other’s expertise and ultimately leverage our resources to imagine — and reimagine — what’s next for retail and beauty.”
Prisma Ventures will partner with early-stage startups, primarily those in the Seed or Series A funding rounds, in four key areas:
- Personalized and data-driven technology;
- AR, VR and the metaverse;
- Technology-powered custom beauty products and in-store services; and
- Social commerce.
These pillars mirror Ulta Beauty’s own digital innovation priorities and will account for the majority of Prisma Ventures’ investments. However, some funds will be reserved for opportunistic technologies beyond the company’s core digital strategy, to more broadly disrupt other facets of retail, beauty or commerce. Applicants will be evaluated based on alignment with one of the four focus areas, leadership and cultural compatibility, diligence and risk assessment, business plan, scalability, IP and differentiation.
A number of other retailers run similar investing vehicles: Patagonia’s Tin Shed Ventures focuses on funding other “responsible businesses,” while Gap’s Strategic Growth Office has been similarly focused on retail tech thus far. Other commerce players are investing in tech through direct acquisition, such as Pinterest’s recent purchase of AI-powered personalization platform The YES and American Eagle Outfitters, Inc.’s acquisition of logistics solution Quiet Platforms.