Positive Comments: Capital Aggregating Upstream to Promote Technological Upgrades and Rational Development of the Beauty Industry
The investment and financing data of the beauty industry in 2025 sends a clear signal: capital is shifting from “chasing brand traffic” to “betting on technological dividends.” This trend has far – reaching positive implications for the long – term development of the industry.
Firstly, the concentrated investment in upstream raw material enterprises, especially in the synthetic biology field, directly promotes technological innovation in the beauty industry chain. In the past, the domestic beauty industry has long suffered from the problem of “emphasizing marketing over R & D.” Brand owners relied on contract manufacturers and imported raw materials, with weak control over core technologies. In 2025, over 60% of investment and financing flowed to the raw material end, and 46.5% of it was focused on the synthetic biology field, which is a targeted breakthrough for this pain point. For example, the financing of companies such as Juwei Biology (backed by the team of Academician Chen Jian of Jiangnan University) and Redlen (leading in AI enzyme engineering technology) not only accelerates the R & D and mass production of functional raw materials such as ergothioneine, recombinant collagen, and bioactive sugars, but also provides differentiated raw material solutions for downstream brands through the closed – loop of “technology – product – application.” Take Weiming Shiguang as an example. Its developed Type XVII collagen peptide raw material has been adopted by multiple beauty brands. This model of “raw material innovation feeding back brands” is reshaping the industry’s competitive landscape.
Secondly, the tilt of capital towards the technology end helps the industry get rid of the “traffic bubble” and return to the essence of value. In the past few years, the “capital + traffic” model has given rise to a large number of new brands that “emerge and die quickly” – they quickly gain popularity through social media marketing but decline rapidly due to insufficient product strength and low repurchase rates. In 2025, the proportion of brand owners receiving investment was less than 20% (only 14 cases), and most of the invested brands were either efficacy – based (such as First Cover Youyi and Conformation Corex) or in niche segments (such as the men’s brand GREENLAB). This reflects capital’s vigilance against “false demands” and “false innovation.” For example, GREENLAB, with its positioning of “invisible facial grooming,” caters to the needs of “refined and lazy” male users and has become the top 1 in men’s makeup GMV. The success of its financing is essentially a double verification of “demand insight + product strength.” This rational investment trend will drive the industry from being “marketing – driven” to “product – driven,” creating growth space for brands with real technological barriers and user value.
Finally, the systematic layout of the industrial chain lays the foundation for the long – term healthy development of the industry. In 2025, beauty investment and financing covered enterprises at all stages from the seed round to the mature stage. There were early – stage financings of start – up technology companies such as Juwei Biology, as well as large – scale mergers and acquisitions like Universal New Material International’s 5.6 billion yuan acquisition of Merck KGaA in Germany. This “full – chain investment” model not only supports the R & D of cutting – edge technologies (such as the underlying technologies of synthetic biology) but also promotes the capacity expansion of mature enterprises (such as the large – scale production of ergothioneine by Jinsan Biology). Ultimately, it forms a positive cycle of “technology R & D – raw material production – brand application – market feedback.” For example, L’Oréal’s investment in LAN and Shuiyang Co., Ltd.’s leading investment in Zhuzhan reflect the strategic intention of leading enterprises to bind upstream technologies and emerging brands through capital. The synergy between industrial capital and financial capital will accelerate the efficiency of technology transformation and enhance the risk – resistance ability of the entire industrial chain.
Negative Comments: The Cold Spell in Brand Financing and Overheating Upstream, Potential Risks Need Attention
Although the concentration of capital upstream is a sign of industry rationalization, the “polarization” of beauty investment and financing in 2025 also exposes potential problems that may have a negative impact on the industry’s ecological balance and innovation vitality.
Firstly, the difficulty of brand owners in obtaining financing may suppress the growth space of new consumer brands. Innovation in the beauty industry not only depends on upstream technologies but also requires demand insight and market verification at the brand end. In 2025, the proportion of brand owners receiving investment was less than 20%, and most of them were concentrated in “safe segments” such as efficacy – based skincare and men’s grooming. New brands in traditional high – growth areas such as makeup and mass personal care received very little financing. This contraction of capital may lead to a disconnection between “technology and brand” – if the raw materials developed upstream lack exploration of application scenarios at the brand end, the technological value will be difficult to fully realize. For example, the new active ingredients developed through synthetic biology need brands to promote them to the market through product design and user education. However, if small and medium – sized brands cannot afford the cost of trial and error due to lack of funds, the speed of technology implementation may be delayed. In addition, the financing of leading brands (such as Chando) is mostly strategic investment before going public, while start – up brands (such as First Cover Youyi, which has only been established for one year) receive limited financing. In the long run, if emerging brands cannot continuously obtain capital support, the “innovation vitality pool” of the industry may shrink.
Secondly, the over – investment in the upstream raw material field, especially in synthetic biology, may lead to technological bubbles and misallocation of resources. In 2025, more than 46% of the 43 raw material investment and financing cases were concentrated in synthetic biology, and some enterprises (such as Juwei Biology) completed 3 rounds of financing within only one and a half years of establishment. This “rush of capital investment” phenomenon may lead to inflated technology valuations. Although synthetic biology is regarded as the “most easily implementable” beauty technology, there are still multiple challenges from the laboratory to large – scale production: for example, the stability of biological fermentation, the competitiveness of raw material costs compared with traditional chemical synthesis, and consumers’ acceptance of the “synthetic” concept. If some enterprises rely too much on capital infusion and ignore the efficiency of technology transformation, there may be a situation of “having technology but no market.” For example, if a synthetic biology enterprise only focuses on the R & D of niche raw materials without establishing stable cooperation with the brand end, its technological value will be difficult to realize, ultimately resulting in lower – than – expected capital returns. In addition, the concentrated investment in the raw material field may also intensify “homogeneous competition” – currently, most synthetic biology enterprises focus on popular ingredients such as recombinant collagen and ergothioneine. If there is over – capacity in the future, a price war may break out, squeezing the profit margins of enterprises.
Thirdly, the imbalance of the industrial chain with “emphasis on the upstream and neglect of the brand” may affect the industry’s anti – cycle ability. The resilience of the beauty industry comes from the synergy of “technology – brand – channel”: the upstream provides technological barriers, the brand builds user perception, and the channel realizes value transfer. If capital is overly concentrated upstream and the brand end lacks innovation due to financing difficulties, there may be a lopsided situation of “strong technology but weak brand” in the industry. For example, when consumer demand shrinks due to economic fluctuations, brands with strong user perception (such as Estée Lauder and L’Oréal) are more likely to resist risks through product iteration and user operation, while upstream enterprises relying on a single raw material advantage may fall into trouble due to a decrease in downstream orders. The data in 2025 shows that very few channel providers and service providers received investment (only Lan Nuoxi, Hydrafacial, etc.). This neglect of the “intermediate links” may also lead to a decline in the synergy efficiency of the industrial chain and affect the overall risk – resistance ability.
Suggestions for Entrepreneurs: Seize Technological Dividends and Build the Ability of “Differentiated Survival”
Facing the new trends of beauty investment and financing in 2025, entrepreneurs need to adjust their strategies according to their own positioning and find opportunities at the intersection of technology and the market:
Brand Owners: Replace “Traffic Dependence” with “Technological Endorsement” and Deeply Cultivate Niche Demands
The cold spell in brand financing does not deny the value of brands but requires brands to pay more attention to “hard power.” Entrepreneurs need to break out of the old “marketing – driven” model and actively cooperate with upstream raw material enterprises (especially synthetic biology companies) to transform technological advantages into product selling points. For example, GREENLAB entered the men’s market with its positioning of “invisible grooming” and cooperated with synthetic biology enterprises to develop the “Original Skin – Perfecting Lotion.” This model of “demand insight + technological endorsement” is worth learning. In addition, pay attention to the unmet needs of niche groups (such as Generation Z and the elderly) and scenarios (such as outdoor skincare and post – minimally invasive cosmetic repair), and reduce direct competition with leading brands through differentiated positioning.Upstream Raw Material Enterprises: Accelerate Technology Implementation and Build an “Application Ecosystem”
Technology – based enterprises such as those in synthetic biology need to avoid “R & D for the sake of R & D” and actively cooperate with brands and channel providers to promote the transformation of raw materials from the “laboratory” to “products.” For example, the cooperation between Juwei Biology and brands such as Dr. Alva and Marubi not only verifies the market value of the raw materials but also provides application cases for its own technology. In addition, pay attention to regulatory dynamics (such as the requirements for the filing of new cosmetic raw materials) and consumer education (such as explaining the differences between “synthetic biology” and “natural raw materials”), and lower the market acceptance threshold through transparent communication. At the same time, avoid blindly following popular ingredients and explore “niche and high – value” raw materials (such as new prebiotics for sensitive skin) to form a technological moat.Entrepreneurs in the Whole Industrial Chain: Pay Attention to the Synergy Value of the “Intermediate Links”
Entrepreneurs in the intermediate links such as channel providers and service providers can seize the pain point of the disconnection between “technology and brand” and provide customized solutions. For example, supply – chain service providers can integrate the needs of upstream raw materials and downstream brands and provide one – stop services of “raw material testing – small – batch production – market verification”; beauty service brands can combine efficacy raw materials to develop “product + service” experiential consumption scenarios (such as skin testing + care sets with anti – aging raw materials) to enhance user stickiness.Rationally View Capital: Focus on Long – Term Value and Avoid “Financing for the Sake of Financing”
Both brands and upstream enterprises need to evaluate their financing needs with “user value” as the core. Brand owners need to carefully plan the use of funds (such as giving priority to product R & D rather than marketing) to avoid cash – flow breaks due to blind expansion; upstream enterprises need to set clear technology transformation goals (such as completing the application of raw materials in 3 brands within one year) to prove to capital the feasibility of the “technology – market” implementation. At the same time, actively introduce industrial capital (such as L’Oréal and Shuiyang Co., Ltd.) and accelerate development with the help of their channels and industry resources, rather than relying solely on financial investment.
In summary, the “upstream tilt” of beauty investment and financing in 2025 is a key turning point for the industry to shift from being “traffic – driven” to “technology – driven.” Entrepreneurs need to seize this trend, find a balance between technological innovation and market demand, and build the ability of “differentiated survival” to take the lead in the industry upgrade.
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