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LA investors smell a winner in direct-to-consumer perfumer Skylar Body

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The consumer investment train keeps rolling through Los Angeles, with organic perfumer Skylar Body becoming the latest brand that investors here are banking on for a big win.

The company raised $3 million late last year in a round led by Upfront Ventures, with participation from serial entrepreneur-turned-investor Brian Lee and other top-tier local investors.

Lee, who made his name (and his fortune) in the LA technology startup scene as a founder of LegalZoom, ShoeDazzle and The Honest Co., was the original backer for Skylar Body, whose founder and chief executive, Cat Chen, also made her way from the world of fresh and clean home care and baby products at Honest.

“Brian was the person who introduced me to startups and e-commerce,” Chen tells me. A former product manager at Apple and Activision/Blizzard, Chen rose rapidly through the ranks at Honest before departing about a year and a half ago to launch Skylar Body.

The beauty industry is a big business, with roughly $40 billion spent on cosmetics, perfumes and other products. And Chen isn’t alone in trying to tackle the market. Scentbird has raised money out of New York for its own take on capturing a share of the perfume business, and they’re not alone.

Globally, venture funding into beauty startups experienced a four-year surge that peaked a while ago, according to Crunchbase. In 2015 $921.9 million were invested across 187 deals, compared with just $120.9 million over 86 transactions in 2012. The amount invested plummeted in 2016 to $608.9 million across 150 deals, which was the last year data from Crunchbase had been made available.

“I’ve been passionate about scents my whole life,” says Chen. “Scents are something that I personally lean towards as part of my beauty regime. I was always an olfactory type of person.”

It wasn’t until Chen’s pregnancy — and after working at Honest — that Skylar’s founder and chief executive became aware that a lot of chemicals considered harmful by regulatory agencies in Europe are hidden in the tiny vials of perfume and eau de toilette that people apply every day.

“There’s hundreds of ingredients that are able to be used here in the U.S. that Europe bans,” says Chen. Paraben and phalate are two that the newly minted chief executive points to as being particularly prevalent in the industry.

Chen’s solution is to create a perfume that uses only natural ingredients, sourced from Cosmo Fragrances, a custom fragrance house that provides scents to many boutique perfumers around the world.

“They really know about natural ingredients,” says Chen. “We have a perfumer called Sarah Horowitz to fill our product and she guides us in the formulation as well.”

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Chen claims that the oils she’s using cost five times as much as what’s used in traditional perfumes and that the organic sugarcane-based alcohol in the scents also adds to cost, but the company is able to keep costs down by going direct-to-consumer (for now).

“Others’ [perfumes] are priced at $70 to $150 per-bottle. Ours is priced at $78,” Chen tells me.

A slew of Los Angeles-based investors are rallying behind Chen and her perfume business. Brian Lee, Amplify, Upfront Ventures, Kaktus Capital (founded by ex-NastyGal executive Deborah Benton) and Brilliant Ventures are all investors in Skylar Body.

Since its launch eight months ago, the company has managed to pick up 10,000 customers with their pitch for organic, personalized fragrances.

Indeed, beyond the organic element, the opportunity to create a more customized product for an individual (and encouraging them to spend more money) through mixing and matching scents has been a huge selling point for the company, Chen says.

These days, customization is key for any new brand that wants to differentiate itself from a fresh-from-the-warehouse product delivered by Amazon straight to your door.

“We are advocating layering to create a personalized scent. Our scents are really light and really fresh so you can layer multiple scents together,” Chen says.

An initial order includes a sample starter pack that contains all four of Skylar Body’s fragrances, and customers can then mix and match as they please. Around 15 percent of shoppers upgrade to the full size from a sample.

“It’s rare that we see a commerce category that so clearly leverages strong market trends with this type of high margin, high repeat rate unit economics,” said Kara Nortman, Upfront Ventures partner, in a statement. “[And] Cat Chen represents everything we look for in a founder. Cat is a triple threat with an unfair advantage in audience building, supply chain, and unusual access to the best local talent across both product and technology coming out of her years at Honest.”