Backed by L. Catterton, the incubator is looking at projects such as nutritional foods for GLP-1 users, tasty functional medicines for kids and whole body health for men.
Venture incubator Squared Circles has closed a $40 million Series A funding round to launch and scale at least five health and wellness brands over the next three years.
News of the funding comes on the heels of a McKinsey market report revealing that 82% of U.S. consumers now consider health to be a top priority, with Gen Z and millennial consumers purchasing more health-focused products and services than previous generations.
Private equity firm L Catterton led the latest funding round, following its investment in Squared Circle’s seed round.
Squared Circles, founded by Alexander Gilkes, Osman Khan and Lukas Dirksen, invested in and then exited hair wellness company Nutrafol. The company has a broad portfolio that includes Magic Molecule, a line of skin-healing solutions, healthy cooking oil brand Algae Cooking Club and Freaks of Nature, a high-tech outdoor skincare brand co-founded by pro surfer Kelly Slater.
Khan, co-founder and CEO of Squared Circles, said the incubator wants to work with scientists to shape a future where products benefit both consumers and the planet.
“We are thrilled to be working with a leading consumer-focused investor like L Catterton, who not only shares our long-term vision for creating transformative brands and our commitment to ingenuity and sustainability, but also brings extensive consumer expertise and deep operational knowledge that will help support our future efforts,” Khan said.
Squared Circles lists six projects under its incubation (stealth) arm, including nutritious foods for GLP-1 users, tasty functional medicines for kids, sustainable energy and cognitive work, and the aptly titled “Project Swimmers,” which focuses on men’s sperm and whole-body health. The venture studio says it will commercialize products in 12-18 months using an “AI-enabled playbook” and will license bioscience IP.
Investors focus on health
What is behind the ongoing wellness boom? McKinsey hypothesizes that consumer interest in health and wellness was already on the rise before COVID-19, but it has only increased dramatically with the onset of the pandemic.
“A lot of people’s lives have been shaken up, and people are becoming much more health conscious and thinking about what they can do to take their health into their own hands and live longer, healthier lives,” McKinsey partner Anna Pione said on a recent McKinsey Podcast.
Despite saddled with student loan debt and navigating the challenges of homebuying, Gen Z and millennials are willing to forego extra spending for healthier choices like functional foods.
The global wellness market is valued at $1.8 trillion, and investors (and retailers) are clearly taking notice: Among other fundraising moves, Lance Armstrong’s venture capital fund Next Ventures is targeting $100 million (its first fund in nearly five years) to invest in holistic health, preventive care, and diagnostics.
Last fall, the founders of RxBar and Orgain raised $312 million for Humble Growth, a New York-based growth equity firm focused on visionary consumer wellness brands, and earlier this year the firm acquired a significant minority stake in human performance brand Momentous for $32 million.
