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Startups

Chinese plastic surgery app eyes $150m Nasdaq IPO

So-Young finds its niche with looks-conscious women

A plastic surgeon demonstrates double-eyelid surgery to a Chinese patient. China's market for cosmetic procedures is expected to grow to $52.4 billion by 2023.   © Reuters

NEW YORK -- A Chinese company aiming to help women put their best face forward could soon make an appearance on the Nasdaq Stock Market here as younger generations drive a plastic surgery boom back home.

So-Young International, the company behind an app-based online marketplace for cosmetic procedures, has filed a preliminary prospectus proposing to raise $150 million.

It provides a community for those seeking to level up their looks, informing them on 5,000 clinics and hospitals as well as nearly 10,000 doctors. Users are encouraged to share their experiences with specific procedures and providers and so help others on the platform make decisions.

The company generated total revenue of 617.2 million yuan ($89.8 million) in 2018, according to a prospectus filed this week with the U.S. Securities and Exchange Commission -- primarily by collecting service fees from medical providers that use the platform to lure customers. Net income more than tripled from the 2017 figure to 55.1 million yuan.

The Beijing-based startup had just completed a $70 million venture funding round last September, attracting the state-owned Bank of China and the China Investment Corp. sovereign wealth fund.

Direct competitor Gengmei raised $50 million last July in its D1 funding round led by selfie-editing app provider Meitu.

Riding the trends of shifting mores, the visual culture of social media, and rising disposable income, the likes of So-Young and Gengmei occupy a niche vertical in the crowded Chinese online health care sector, where homegrown internet trio Baidu, Alibaba Group Holding and Tencent Holdings have all invested heavily.

Market research firm Frost & Sullivan estimates that China's medical aesthetic services industry amounted to $17.7 billion in 2018 and will grow to $52.4 billion by 2023. The country is also poised to overtake the U.S. as the world's largest market for aesthetic medicine by 2021.

More than 80% of Chinese consumers of aesthetic medicine were born in or after 1990, and patients 19 and younger accounted for nearly a fifth of those undergoing cosmetic procedures in 2018, according to a report published by So-Young.

Since its founding in 2013, So-Young has attracted 35 million users and amassed more than 2 million case-based user blogs called Beauty Diaries.

"We believe our business model, which connects a user's innate desire to be more beautiful with a personal, emotionally-attached discovery and assessment process on our platform, is highly effective in facilitating users' decision making and enhancing user experience," the company said in the prospectus.

Social sharing is key to So-Young's success, much as it is to a new generation of Chinese e-commerce startups, including Alibaba- and Tencent-backed lifestyle app Red, which raised more than $300 million last year, and Tencent-backed group-buying retailer Pinduoduo, whose market capitalization exceeds $25 billion.

On the technology side, So-Young employs artificial intelligence for analyzing users' facial features to make treatment recommendations and predict results. The company intends to use the proceeds from the stock offering tor investing in research and development, among other purposes, the prospectus said.

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