Oddity acquires biotech startup Revela in $76 million deal

The beauty and wellness platform behind Il Makiage and Spoiled Child is investing more than $100 million to acquire a biotech startup and open a U.S.-based lab in a bid to make the most effective cosmetic products on the market, the company announced Thursday.

Oddity is buying startup Revela for $76 million, its largest acquisition to date, and is putting another $25 million toward building Oddity Labs in Boston. The merger will bring to Oddity a team of scientists tasked with creating brand-new molecules, using artificial intelligence, that can be used in its cosmetics brands and future lines.

AI-based molecule discovery is a common tool used in the pharmaceutical industry to create new drugs, but it isn’t widely used in the beauty and wellness industry. Legacy brands have long relied on building products using proprietary formulations with a similar set of active ingredients, such as retinol, hyaluronic acid and peptides. 

“While my competitors are doing more of the same for decades and serving consumers with the same ingredients in the same old channels, we are building the future of the category,” Oddity’s co-founder and CEO, Oran Holtzman, told CNBC in an interview. 

“With this acquisition, we are using biologics to bring game-changing, science-backed beauty and wellness products to the market and to our users. This is our DNA, we are not here to do more of the same but to build something new,” he said.

Oddity hopes to develop new molecules designed to address specific pain points, such as hair loss, wrinkles and the myriad other concerns consumers have long turned to legacy brands to solve with varying results. 

“People ask … why doesn’t pharma go into beauty?” said Evan Zhou, Oddity’s new chief science officer and Revela’s co-founder and CEO. 

“I think it’s very hard because the cultures don’t align, right? So pharmaceutical companies kind of look down upon beauty, right? Because that’s not what they went into this industry for,” he said. “Everybody wants to cure cancer, that’s why people became scientists.” 

Zhou said legacy beauty and wellness companies have traditionally faced difficulties in attracting top scientific talent. As a result, the industry has lagged in innovation and instead focused its investments on branding and marketing, he said.

But after personal experience with the limitations of beauty products — watching his mom spend thousands on hair serums that failed to reverse her hair loss, or seeing his wife buy pricey moisturizers with dubious promises — Zhou was inspired to bring his biotech prowess to the beauty and wellness industry to create products that could definitively work. 

“I want someone who has issues to…