Robin Tsai of VMG Partners: "We're delving into categories that are still a little amorphous"

Private equity firm VMG Partners has invested in some of beauty's biggest disrupters: Drunk Elephant, Briogeo and Perfect Diary. But the 16-year-old firm didn't have a firm playbook when it first started out, said Robin Tsai, a general partner at VMG who leads the company's beauty and wellness practice.

"As a first-time fund, you're really more defined by what works and what doesn't," he said on this week's episode of the Glossy Beauty Podcast. "You can have all these great theses at that point in time, but it's a lot easier to connect the dots when you're actually looking backward than when you're looking forward. What I would say that we're good at is working with founders. It's just something that was part of our DNA. It probably also came from the fact that we were a startup, as well, so we could really empathize with what people were going through. We found that we were very good with brands and had a certain gut in terms of what consumers really cared about and where they were headed."

To date, VMG has realized many of its beauty and wellness investments, including Drunk Elephant, which sold to Shiseido for $845 million in 2019, which is something that Tsai said founders recognize. "We have sold the most businesses of any consumer fund to strategics over the last 15 years. That track record is an important one, and it's something that founders truly care about," he said.

And while the investing landscape is changing rapidly, with firms investing earlier and SPACs becoming part of the equation, Tsai said VMG's focus is on "elevating" the businesses it invests in. "Our M.O. is really more about investing deeply within the ecosystem of the categories that we're investing in, so that's food and beverage, beauty and personal care, the wellness space, alcohol and spirits, the pet space. It really is having a super, super deep knowledge of who the stakeholders are, what makes them tick," he said