Fund Two Adjustments: Bigger Follow‑On Capacity

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He’s one of the most respected investors in beauty and wellness—and he’s seen every boom, bust, and bubble the industry has gone through.

In this episode, Mike sits down with Rich Gersten, Co-Founder and Managing Partner of True Beauty Ventures, a beauty and wellness–focused investment firm built by operators for founders. Rich has spent over 20 years investing in consumer brands—from early private equity days at North Castle Partners to launching True Beauty Ventures, one of the most influential early-stage funds in the category.

Rich shares how he accidentally stumbled into beauty investing, what makes the category so resilient, and why he believes the “beauty bubble” is finally normalizing. He also opens up about the reality of early-stage investing, the rise (and decline) of celebrity brands, and what he’s learned from building a beauty-focused fund from scratch.

You’ll learn:
✅ Why beauty and personal care outperform other consumer categories
✅ How Sephora and Ulta transformed the entire retail landscape
✅ The biggest mistakes founders make when scaling beauty brands
✅ How True Beauty Ventures approaches early-stage investing
✅ Why most celebrity brands fail (and what makes Rhode different)
✅ What’s really happening in beauty M&A and why exits have slowed
✅ How Rich thinks about valuation discipline and pro-rata investing
✅ Why execution—not product—is the #1 differentiator

👉 If you’re a founder, operator, or investor in beauty or consumer, this episode offers a rare inside look at what it really takes to build and back the next breakout brand.

Timestamps
00:00 Intro
01:20 How Rich Got Into Beauty Investing
04:00 What Makes Beauty Unique vs. Other Consumer Categories
07:00 Sephora, Ulta, and the Rise of Specialty Retail
08:30 Why Rich Started True Beauty Ventures
11:00 How They Add Value Beyond Capital
13:00 The Difference Between Private Equity and Early Stage
15:00 Lessons from Fund I & II: Check Sizes, Risk, and Returns
19:00 The “Back Up the Truck” Investment Strategy
22:00 How True Thinks About Pro-Rata and Founder Relationships
25:00 Sephora & Ulta: Still Essential or Optional?
28:00 The $5M Revenue Trap (and Why Early Might Be Better)
31:00 How True Evaluates a Brand’s Potential
34:00 Outbound vs. Inbound Deal Flow
37:00 The Real Economics of Beauty
40:00 Why Luxury Skincare Is Failing
42:00 Amazon’s Surprising Role in Beauty
44:00 The Problem With Celebrity Brands
47:00 Why Rhode Worked—and Others Didn’t
50:00 Returns, Risk, and How Beauty VC Actually Works
55:00 The M&A Slowdown: Too Many Sellers, Not Enough Buyers
01:00:00 The Future of Beauty Exits and Strategic Buyers
01:03:00 Makeup’s M&A Problem Explained
01:05:00 Valuations, Prefs, and Founder Pitfalls
01:06:30 Book Picks: Outlive by Peter Attia & Founder Stories in Beauty

📬 Subscribe for more founder stories & scaling insights:
👉 The Consumer VC Newsletter - https://www.theconsumervc.com/

Follow Mike Gelb:Twitter / IG / TikTok → @mikegelb / @consumervc