As a woman in her 20s with an Instagram account, I’ve witnessed the explosive rise and destigmatization of medical spa treatments. From the influencer I ran track with in high school posting promos for lip blushing and fillers, to constantly discussing buying a Groupon for Baby Botox with my friend Emily, these treatments have become a part of regular conversation in a way they haven’t in the past.
The underlying medical spa industry has grown rapidly alongside its new popularity, too. Medical spas are projected to be a $30 billion business by 2030, according to a report by Grand View Research. And the American Med Spa Association reports that the number of clinics offering these treatments grew 62% from 2018 to 2022.
Investors are starting to take note of this industry. Most of these medical spas — 81%, according to American Med Spa Association data — are independent clinics or small businesses. Private equity firms are starting to circle like vultures seeking out prime candidates for roll-up strategies. Startups are building tech solutions for these small businesses with VCs seemingly eager to back them.
So when I saw that RepeatMD, a vertical SaaS company for the medical spa industry, raised a sizable $50 million Series A, I wasn’t surprised. But I did have one question.
While I get why investors would want to back a vertical SaaS company — RepeatMD provides a suite of tools, including marketing, online booking and payments — in an exploding industry, the industry itself gave me pause.
I was curious how these investors, both in RepeatMD and on the private equity side, were thinking about the risks associated with a sector so reliant on changing consumer trends. The success of these businesses is entirely based on the strength of underlying beauty fads and largely whatever unrealistic beauty standards consumers are currently trying to achieve. In theory, if promoting natural beauty became en vogue, much of the medical spa industry could become irrelevant.
I mean, think about it. When was the last time you heard about buccal fat removal? That flooded social media and beauty magazines in December 2022. But now, just a year later, I had to look up the time period in which it was a fad because nobody really talks about it anymore. Do people still get tooth gems?
But investors make a strong case that fads aside, the med spa industry isn’t going anywhere.
Sarah Kim, a partner at Centana Growth Partners who invested in RepeatMD, said that she isn’t worried about the individual trends having a strong impact on the business, as the overall industry has accelerated in recent years — despite individual trends coming and going.
“I think there will always be tailwinds in the aesthetics industry and new innovation,” Kim said. “It’s about understanding what the research is, what the true benefits are, and then staying ahead of that curve.”
Jacob Cole, a principal at Full In Partners who led the firm’s investment in RepeatMD, said that while the actual procedures that people are looking for may change with the seasons, it doesn’t change the fundamental shift in the aesthetics and medical spa industry: Younger people are getting procedures and aren’t ashamed to talk about it anymore.
“Ten-plus years ago, Botox and the like was something you did in your 50s and were kind of embarrassed about it,” Cole said. “Recently it’s a lot more socialized. Now you get your regular work done and are not ashamed about it.”
Another thing that stands out about this industry is the regularity of these treatments. Procedures like Botox are not a one-time thing. Cole added that RepeatMD makes it easier to get customers on a schedule with discounted packages and promos that help lock in this repeat business.
Companies that have a subscription-based revenue system are generally easier to underwrite, because revenue tends to be more consistent. In an industry like this that almost requires repeat visits by its customers, revenue inflow could almost resemble a subscription-based model.
These medical spa procedures are also more expensive cash-based treatments. Consumers are spending a solid chunk of change every time they get a procedure done, and the fact that RepeatMD allows them to split up payments through a partnership with Affirm allows more access to more potential customers without any insurance wrangling.
Despite the higher price tag, aesthetics is a place consumer spending remains strong during tougher economic times. Kim said that historical data backs this up, too. When looking at Botox, there was only a small dip in sales during the great financial crisis.
“Having self-confidence and feeling good about yourself is so core to people, it is a category of spend that hasn’t seen a lot of drop-off,” Cole said.
While beauty trends may come and go, investors are bullish that consumers will always be seeking out the next one.