Ulta Beauty launches $20 million innovation fund for startups

Besides money, Ulta says it can offer the startups its deep expertise and resources as a retailer with more than 1,300 locations. That’s often the promise for corporations that offer funding to startups: Let us use your tech, and we’ll give you a platform to reach thousands of new users. 

Ulta is somewhat late to that party. Many companies have tried innovation funds, Steve Kaplan, a professor at the University of Chicago’s Booth School of Business, said in an email. They can add value to startups and help the parent companies innovate. 

But there are challenges. Decision-making can be slow, and some startups don’t want to be tied up with a strategic investor too early. Also, such funding is one of the first places companies restrict when times get tough.

Ulta said its Prisma Ventures will look to invest in early-stage startups that are raising seed or series A funding rounds. It’s interested in companies working on personalized or data-driven technology; virtual reality, augmented reality and the metaverse; in-store services and tech-powered custom beauty products; and social commerce.

“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,” Ulta’s chief digital officer, Prama Bhatt, said in the news release.

Ulta first announced Prisma Ventures last year and has already invested in several startups. They include California-based Luum, which makes robot technology designed to apply lash extensions, and Revea, which formulates custom skin-care products.

Ulta also announced earlier this summer plans to launch an accelerator for early-stage beauty brands owned by and made for people of color.

Tangentially, Chicago is becoming a destination for corporate innovation centers, with about a dozen companies—including Bosch, Tyson Foods, Accenture and others—opening such hubs since 2016.