Are Skincare Device Brands Good Investments?

In the beauty industry, there are several categories that seem perennially poised to pop in the United States, particularly if they’ve gained traction abroad. The beauty device category, which is expected to accelerate globally at a compound annual growth rate of 16.2% to go from $52.04 billion in 2024 to $60.48 billion in 2025, according to The Business Research Co., is one of them.

Now, it might actually be popping, with Americans buying skincare electronics from brands like Lyma, Dr. Dennis Gross Skincare, Solawave, NuFace, Omnilux and BeautyBio. Timed with device category buoyancy, a specialist in it, The Beauty Tech Group, owner of CurrentyBody, Tria and ZIIP Beauty, is reportedly considering a 350 million pound or nearly $470 million listing on the London Stock Exchange.

Investors evaluating whether to jump in on the IPO should take heed: The beauty device business has had more bust than boom. Doomed by copycats, a pullback from professional distribution, lack of replenishment and manufacturing issues, Clarisonic, which was shuttered by L’Oréal in 2020, offers a cautionary tale to investors considering entering it.

Delving into challenges and opportunities in the beauty device realm, for the latest edition of our ongoing series posing questions relevant to indie beauty, we asked nine investors and investment bankers the following: What’s your take on skincare device brands from an investment perspective? Where does the skincare device category stand in terms of consumer receptivity and growth?

Jamie Woodard Partner, Conteur Capital Partners

Beauty devices are a tough category for me as an investor. I still feel like I am learning about efficient business models. It’s interesting to look at Dennis Gross, whose primary business is skincare products. The LED device is an expansion and complementary of its existing offerings. The ticket size for these devices is high from $99 to tens of thousands of dollars. These are certainly products for the high-income consumer, which can be a business risk during economic downturns.

My core consideration today is how these businesses will be impacted by tariffs under the current administration. With hardware, you have to take a good look at the risks within the supply chain. We definitely saw the worst-case scenarios during COVID. With tariffs, will the price increase be passed onto consumers? What is consumers elasticity when it comes to higher prices for such a discretionary device?

Jon Tenan Managing Director, Baird

The device category experienced tremendous growth in 2020 (early COVID) as consumers sought at-home substitutes for spa treatments. That increased demand brought scale to incumbents and accelerated growth, but also put a spotlight on the negative perspectives. However, for true brands that have built consumer trust founded on clinical efficacy, copycats and manufacturing issues are not top concerns.

A great example of this is Omnilux, the leading red-light therapy device on the market. (Research indicates that Omnilux is around twice as large as the next leading premium LED therapy device). Omnilux's competitive advantage lies in its best-in-class product both in terms of efficacy and form factor, coupled with a unique ability to win across the professional channel (derm and med-spa) and DTC, supported by extensive literature and trusted provider relationships.

The replenishment opportunity concern remains inherent to the device category. However, we are still in the early innings of market adoption, leaving tremendous white space within this market. Furthermore, especially for premium brands like DDG and Omnilux, where price points are around $400, the ability to increase customer LTV by adding other form factors and products is tremendous.

As an example, most of these brands scale via a hero SKU, which is often a full-face mask, but there are numerous opportunities to drive retention via 1). other targeted form factors (neck, spot treatment, portable), 2). other uses of the technology (e.g. acne, pain, etc.), 3). category expansion (e.g., skincare), and 4). international expansion.

While these extension opportunities remain nascent, we have now witnessed five consecutive years of exceptional growth within LED device, dispelling the notion that categorical growth was solely driven by retail shutdowns during COVID. While consumers are returning to derms and med spas, the step-function awareness change drove dynamics that are here to stay, including 1). advancements in LED technology, 2). growing evidence of its clinical benefits, and 3). consumer interest for noninvasive, effective skincare solutions that can be used at home.

For brands such as Omnilux and DDG, the at-home solution is not a substitute to the professional solutions, but rather a supplement that enhances efficacy, and industry data suggests that shift in consumer behavior is here to stay.

Kelly Bottenfield CEO, K & C Ventures

The skincare device category is gaining traction in the U.S., driven by consumer demand for at-home, professional-grade treatments. However, as an investor, I strongly believe the biggest hurdles are copycats, long-term customer loyalty and efficacy concerns. The market is saturated with lower cost knockoffs, making differentiation and IP protection critical.

Additionally, consumers are increasingly skeptical, requiring clinical validation and strong educational efforts to drive adoption and sustained usage. LED, microcurrent and laser technologies could be ripe for long-term success, but there needs to be replenishment opportunities to keep the customer engaged (serums/gels). The category is promising, and brands with patented innovation, proven efficacy and a clear consumer loyalty strategy will stand out in the long run.

Andrew Ross Senior Advisor and Venture Partner, XRC Ventures

Any beauty company looking to stay competitive in effective skincare results will have to consider the combination of devices and topicals. At-home beauty devices were one of the fastest-growing beauty categories in 2024, if not the fastest, at more than 20% growth (see our Beauty & Personal care benchmark report for more). Consumer demand is there, and distinctive, protectable technology that has been clinically proven effective for home treatment already exists.

We argue that the industry “ghost” of Clarisonic needs to be laid to rest. Just look at Dyson in haircare and L’Oréal, which is working hard to catch up. We saw these trends in 2022, which led to our investment in Solawave, the leading brand in dermatological at-home light treatments.

That said, devices are very different from topicals, and the business model and success metrics must reflect that. This results in a disconnect for device brands looking to raise and be acquired by traditional beauty companies. Profit margins need to be high and CAC extremely efficient to ensure first-order profitability as there is a longer replenishment cycle.

Brand investment is also needed to expand consideration for multiple devices, to purchase device enhancements and to gain credibility in complementary topicals designed to enhance results (like Solawave’s revolutionary LightBoost technology). Constant innovation, differentiation and aggressive IP protection are required to stay ahead of copycats and create a reason to replace your existing device. Key skincare metrics like repeat rate must be adapted to track consumer love and usage rituals.

Tina Bou-Saba Investor

I agree that consumer interest in skincare devices appears to be relatively strong today. However, I don’t believe that this category is attractive to venture capital or growth investors. Beauty hardware products are generally lower margin than prestige price-point consumables, and it is extremely difficult to protect the IP. Copycats run rampant, and many consumers are price-sensitive and will happily buy a no-name device that promises the same effects as the fancy brand does just as we see with beauty product “dupes.”

Moreover, the lack of replenishment is a major challenge, and I haven’t seen device makers successfully “attach” ongoing consumable purchases in a sticky way. There are so many compelling skincare products out there, and it is very difficult to excel in both areas.

Importantly, I would note that this does not mean that beauty devices are a “bad business.” Rather, they don’t have the characteristics that venture and growth investment models require (high margins, repeat purchases, brand loyalty, path to high multiple exit, etc.) There are many “good businesses” that are not a fit for this type of equity capital.

If I were running a beauty device business, I would be squarely focused on unit economics, IP protection to the extent possible (recognizing that it is an ongoing battle), debt financing for inventory and achieving a healthy operating margin. I’d also explore the professional channel, which has strong growth and may present the opportunity for partnerships that are “stickier” than one-off consumer purchases.

Meghan McLaughlin Executive Director, Moelis

In the device category, issues involving copycats, lack of replenishment and manufacturing challenges are real, and they haven’t dissipated since Clarisonic. Any winner in the space will need to prove they have a sustainable brand moat by gaining sizable share and owning a large piece of the category with their brand. For example, Dyson and Shark are device success stories that have been able to compete effectively through innovation and product development.

Odile Roujol Founding Partner, Fab Co-Creation Studio Ventures

I’m usually bullish on disruption, but, in skincare devices, there are three main challenges:

1). Usage: Many devices are kept in the closet.

2). Margins: Device margins are typically low, so consumables matter.

3). Attractiveness to retailers: Low inventory turns combined with obsolescence make this category a headache for retailers.

I am more optimistic about computer vision and beauty, especially when it’s saving time and money. Luum Lash, named by Time magazine as one of the best inventions of 2024, is an example. It’s now at Nordstrom and was at Ulta in the Bay Area in the past.

Elizabeth Lim Strategic Advisor, Joyance Partners

The skincare device category presents a compelling investment opportunity as it bridges beauty and technology, two sectors poised for continued growth. However, it is also a highly complex and competitive space, requiring careful navigation.

There is undeniable potential as consumers remain eager for at-home solutions that offer professional-level results at a fraction of the cost of in-office treatments. Devices that leverage personalization, app integration and AI-driven innovation could further enhance their appeal. Imagine the ability to track measurable skin improvements in real time, essentially conducting personal clinical trials at home. This level of feedback could help consumers determine what truly works for their skin, potentially fostering long-term brand loyalty.

Brands like BeautyBio, with its GloPRO microneedling tool and GLOfacial hydration device, differentiate themselves from the crowded field of red light therapy and microcurrent tools. Similarly, Medicube’s 6-in-1 Booster Pro Device, which touts the coveted "glass skin" effect, has garnered attention with its ambitious claims.

From an investment perspective, while the category shows strong projected growth and the potential for high returns, it is also highly saturated. Without strong IP protection or a clear competitive advantage, brands risk being undercut by lower-cost alternatives. Success in this space will depend on meaningful innovation, strategic branding and the cultivation of a loyal consumer community.

Divya Gugnani Founder, 5 Sens and Concept to Co

The skincare device category is experiencing an interesting moment in the U.S. market, particularly as consumers increasingly seek professional-grade treatments they can perform at home. While these devices can effectively deliver milder versions of in-office treatments, which consumers appreciate, I approach this category with significant caution from an investment standpoint.

Several fundamental challenges make skincare devices a complex investment proposition. First, the continuous need for technological innovation requires substantial capital investment, yet the rapid pace of advancement can quickly render existing technology obsolete. This creates a challenging cycle of constant reinvestment to stay competitive.

The market is also plagued by knockoffs and counterfeits, which can rapidly erode a brand's market share and pricing power. The Clarisonic story serves as a sobering reminder of how even a category leader backed by a beauty giant like L'Oréal can struggle to maintain long-term sustainability in this space.

Additionally, the liability considerations are substantial. When you're dealing with electronic devices being used on people's skin, any malfunction or adverse reaction can lead to costly legal issues and damage to brand reputation. These risks require significant insurance coverage and robust quality control measures, which further impact profitability.

While I believe these devices serve a valuable purpose in the beauty ecosystem, particularly in democratizing certain treatments that were previously only available in professional settings, the combination of high development costs, technology obsolescence risk, knockoff proliferation and liability exposure makes them less attractive from an investment perspective compared to other beauty categories.

I prefer to focus my investments on areas where brands can build more sustainable competitive advantages and where the barriers to entry are higher in terms of formulation and efficacy rather than hardware.

If you have a question you'd like Beauty Independent to ask investors, please send it to editor@beautyindependent.com.