Despite their plethora of beautifying treatments, med spa services have often been viewed because the ugly duckling of the beauty industry — especially in the case of investing.

That’s changing. Last yr, Millennial med spa Ever/Body, which offers laser facials, Botox, HydraFacial, fillers and laser hair removal, raised a $38 million Series B from a combination of investors including Tiger Global Management, Addition and Fifth Wall and later a $55.5 million Series C funding.

This yr, Upkeep, an app that permits users to search out, book and pay for med spa treatments, secured $2 million in seed funding, and most recently, private equity firm KKR took a “notable” minority stake in SkinSpirit, the biggest provider of Botox and filler within the country.

On the time of the deal, SkinSpirit’s founder and chief executive officer Lynn Heublein noted that in her almost twenty years within the business, she has never seen as much investment interest within the category as now.

“Since it’s very fragmented, there may be opportunity for somebody to emerge because the provider of selection for people who find themselves in search of a high level of experience and artistry from their medical aesthetics provider,” she said.

In keeping with Lindsay Carlson, a managing director at investment bank William Blair, increasing consumer demand is the most important reason why investors are betting on the category’s long-term growth prospects despite mounting fears that a recession might be on its option to the U.S. next yr, while inflation stays stubbornly high.

“You’re seeing an expanding addressable market. You’ve got men and ladies as young as 18 first coming into the med spa channel and in search of treatments and there’s a chance to supply them multiple services over time and it’s very, very sticky,” she said. “You’re just about a client for all times. There’s an actual LTV, there’s very high customer loyalty, despite the market backdrop that we’re seeing and concerns of recession.”

At the identical time, services comparable to injectables have gotten a much less taboo subject. “I feel like persons are so rather more open and willing to share details about not only how you can improve, but how you can look your best and how you can feel confident about yourself and if it’s getting Botox or getting fillers or tweaking this or that,” Carlson added.

Specifically, she sees multiservice models doing particularly well as they’ve “real scalability.”

Tara Hyland, a vp at private equity firm Fundamental Post Partners that has invested in sugaring and tanning salon Sugared + Bronzed, told Beauty Inc that investors are starting to appreciate that quite a bit there’s numerous growth on this category.

“The financial profiles of those businesses and the recurring revenue that comes from the consumers who’re increasingly hooked on the outcomes from services, pairs well for a robust end result and a long-lasting business model that may be very successful,” she said.

BeautyHealth, best known for its HydraFacial that sucks gunk out of pores, can also be riding high on this wave. Having went public through a SPAC in May 2021, it reported net sales of $88.8 million in its most up-to-date quarter and raised its full yr guidance.

Now, it has lofty ambitions to double net sales by 2025, to the range of $600 million and $700 million.

“Med spas are a big and high-growth market. We see the med spa channel booming within the U.S. as consumers search for a single point of access for health and beauty treatments,” said president and CEO Andrew Stanleick, citing AmSpa data showing that the variety of medical spas within the U.S. increased 19 percent to eight,841 this yr.

In one other sign of the health of the sector, he also pointed to data from the U.S. Bureau of Labor Statistics showing that skin-care specialist jobs are expected to grow 17 percent by 2030, outpacing job growth in other categories.

“We’re seeing and benefiting from this growth directly,” he said. “The variety of med spa Hydrafacial treatments has grown 26 percent year-over-year, making med spa our most efficient treatment channel within the U.S. and key to our continued growth. Despite the macro environment, we proceed to see healthy demand in our med spa channel which is showing no signs of a slowdown.”

At the identical time, laser facial specialist Skin Laundry is trying to double its footprint on the back of increased demand for its services. Not including its licensing agreement within the Middle East, the El Segundo, California-based company, which was launched by Yen Reis back in 2013 and is best known for its 15-minute laser facial, has 25 clinics and plans to double this figure by mid-2023. 

Hyland concluded that there may be an a component of the lipstick effect to this industry — referring to the index coined by beauty mogul Leonard A. Lauder based on his theory that beauty sales increase during tough economic times — despite the actual fact there’s an obvious price discrepancy between lipstick and sweetness services.

“It’s becoming more of a ritual giving consumers a component of self care and efficacy that they might not find a way to get from product alone,” she said.