Prelude Growth Reaches $600 Million Upper Limit for Third Fund

The private-equity firm has backed consumer brands such as Sol de Janeiro, Summer Fridays and Bachan’s

Prelude Growth Partners, a private-equity firm started in 2017 by two specialists in the consumer sector, has raised its third fund to back fast-growing brands.

The fund

The vehicle, Prelude Growth Partners III, closed at its $600 million upper limit and was significantly oversubscribed, said Neda Daneshzadeh, the firm’s managing partner and co-founder. The firm raised most of the money from its roster of limited partners in previous funds, which included endowments, foundations and pensions, while adding a small number of new investors, she said.

The fund is more than twice the size of its predecessor, which closed in 2021 with $250 million. The firm’s first vehicle, from 2018, gathered $80 million.

Daneshzadeh said a number of recent exits fueled Prelude’s fundraising drive, helping return capital to Prelude limited partners when many private-equity investors lack ready cash for new fund commitments.

The strategy

Founded and led by women, Prelude was started by Daneshzadeh, a former partner at consumer-focused buyout firm L Catterton, and fellow managing partner and co-founder Alicia Sontag, who formerly headed the beauty-brands segment at consumer health-products giant Johnson & Johnson.

Prelude aims to commit $15 million to $75 million per deal. The firm’s management tries to identify extremely fast-growing niches—recent examples include food condiments and premium skin care—to which many consumers are dedicating a larger and larger share of their spending, Sontag said.

“First and foremost, we focus on subsegments within the broader consumer landscape that are seeing disproportionate growth,” she said.

While overall U.S. consumer spending remains stagnant, largely because of inflationary pressures and economic uncertainty, Daneshzadeh said Prelude’s portfolio is relatively sheltered from economic swings because of its concentration in subsectors experiencing “multidecade secular tailwinds,” allowing it to grow through downturns.

Prelude’s current brands include Japanese condiment-maker Bachan’s, skin care brand Skin Pharm and makeup line Westman Atelier.

Prelude’s past exits have included skin care brands Sol de Janeiro, acquired by strategic buyer L’Occitane in 2021, and Summer Fridays, which TSG Consumer Partners bought last year.

The context

Private-equity fundraising has remained difficult this year, despite some hopes that new fund commitments would finally recover from a yearslong slump. Globally, firms raised $223 billion in this year’s first half, behind last year’s pace, according to PitchBook Data, which collects information on the private markets.