Dashicheng Optical Completes Tens of Millions of RMB Series A+ Financing to Build a Globally Leading One-Stop Color Contact Lens Supply Chain

VCBeat learned第一时间 that the supply chain solution provider for cosmetic contact lensesShenzhen Dashicheng Optical Technology Co., Ltd. (hereinafter referred to as "DSC Optical")Recently completed tens of millions of yuan in A+ round financing, led by Shenzhen Capital Group. The proceeds will be used to accelerate the expansion of production lines for cosmetic contact lenses, research and development of new products and materials, and the layout of global compliant markets. Previously, the company received investments from Nut Capital and Jiupai Capital.

DSC Optical Technology was jointly founded by senior elites from the cosmetic contact lens industry in China and South Korea. It is a medical device company specializing in the research, development, and production of colored contact lenses. The company is committed to becoming a globally leading one-stop supplier of cosmetic contact lenses, possessing advantages such as the world's leading third-generation fully molded contact lens production technology, self-produced molds, new materials, ink technology, and more. In addition to integrating industry production capacity and promoting the digitalization and flexible production transformation of cosmetic contact lenses, the company also provides customized OEM services, meeting customers' diverse needs ranging from lens design, brand building, material packaging, to license applications.

In 2023, DSC Optical Technology obtained the first and only soft hydrophilic contact lens product registration certification from the U.S. Food and Drug Administration (FDA) in China, and passed the National High-tech Enterprise certification.

Color Contact Lenses as a standout product in the recent wave of new consumer trends can change the color of the pupils, enlarge their size, and help enhance the wearer’s appearance. They are highly favored by young consumers. Their consumption model is quite similar to fast fashion, with consumers keen on pursuing new styles and trendy fashions.

Driven by the "appearance economy," the cosmetic contact lens industry has rapidly expanded its market space. According to data from Guotai Junan Securities, between 2016 and 2021, the market size of China's cosmetic contact lens industry grew from 4.2 billion yuan to 28.2 billion yuan, with an annual compound growth rate of 46%. It is estimated that by 2025, the overall market size of cosmetic contact lenses in China could reach 47 billion yuan, potentially becoming the most important market globally. This rapid growth is mainly due to the continuous expansion of the consumer base, a gradual increase in market penetration, and the growing value of customers.

The demand has been verified, but the supply from compliant domestic manufacturers is far from sufficient. Despite their seemingly simple and thin appearance, cosmetic contact lenses are, in fact, an industry plagued by a "bottleneck."

From the perspective of the supply chain, most domestic cosmetic contact lens brands in China currently adopt the OEM model. The majority of these brands rely on the support of OEM manufacturers for advancements in design and production technology. The upstream OEM suppliers are primarily based in Taiwan, China, as well as in South Korea and Europe.

According to VCBeat data, the current market for cosmetic contact lenses in mainland China heavily relies on imports, with the proportion reaching nearly 90%. Among them, Taiwan, due to its production capacity and scale advantages, occupies approximately 68% of the mainland China market share.

From a regulatory perspective, in 2012, cosmetic contact lenses (also known as "color lenses" or "circle lenses") were categorized under the strict supervision of Class III medical devices, alongside high-risk medical devices such as artificial heart valves, intraocular lenses, and implantable pacemakers. In the e-commerce sector, the online sale of cosmetic contact lenses has been under stringent control, only gaining legal sales status on platforms like Tmall by 2015. Additionally, according to the latest advertising law, celebrity endorsements for cosmetic contact lenses are prohibited.

The dual attributes of "fashion" and "medical" have trapped the cosmetic contact lens industry in a vicious circle where "those with qualifications are not fashionable enough, and those that are fashionable may not be compliant." The "regular army" that can satisfy both the drug regulatory authorities and consumers is particularly scarce. Cosmetic contact lens brands must possess the ability to iterate quickly in order to stand out in market competition. When domestic brands rely excessively on foreign supply chains, it becomes difficult for brand owners to mobilize the supply chain to respond swiftly, leading to supply shortages and price fluctuations. As a result, the supply chain has become the "critical point" for domestically produced cosmetic contact lenses.

DSC Optical Technology, as a Sino-Korean joint venture in the colored contact lens supply chain, boasts two core advantages. Firstly, it excels in flexible production manufacturing while ensuring stability and comfort in mass production. Secondly, through global channel deployment, it empowers more brands comprehensively, achieving a dual-driven model of "manufacturing + brand."

Leveraging the advantages of its joint venture with South Korea, DSC Optical Technology successfully introduced advanced automated equipment from South Korea and carried out modifications and upgrades. By strengthening the integration of upstream and downstream supply chains, the company has localized its imported supply chain. Relying on a flexible and fast-response supply chain system, DSC Optical Technology ensures product quality and delivery timelines while flexibly responding to the rapidly changing demands of brands and consumers.

According to Li Jiayi, the founder of DSC Optical Technology, China's current production capacity for colored contact lenses is still dominated by the semi-molded and semi-lathe cutting process, with very limited domestic capacity mastering the full molding mass production technology. DSC Optical Technology adopts South Korea's most advanced third-generation full molding process. Compared to the second-generation semi-molded and semi-lathe cutting process, products made with the full molding process offer superior color performance and wearing experience. Moreover, the upgraded full molding process provides greater production flexibility, making it more suitable for small-batch, multi-style order requirements, while also reducing the delivery cycle by over 30%.

In addition, DSC Optical Technology has further creatively optimized the production process by breaking down production steps to achieve independent scheduling and production. In automatable sections, robotic arms have been added to improve production efficiency and product quality.

DSC Optical Technology offers a wide range of product styles, with approximately 4,000 series and 15,000 color options available. The company has about 550 ready-to-ship SPUs.

DSC Optical Technology and its products have obtained strict certifications from both domestic and international markets. In the just-passed year of 2023, the company received the first-ever certification in China from the U.S. Food and Drug Administration (FDA) Soft hydrophilic contact lens product registration certification, daily disposable soft hydrophilic contact lenses approved by China NMPA, and compliance with the international standard EN ISO13485:2016 (Medical Devices - Quality Management Systems - Requirements for Regulatory Purposes) certification.

Not only that, but the company group also holds multiple international medical certifications such as CE, ISO13485, Korean GMP, Korean SMDR, Malaysia MDA, and Saudi MDMA (SFDA), ensuring the high quality and compliance of its products worldwide.

Li Jiayi told VCBeat that, as of now, the monthly production capacity of DSC Optical Technology and its factories has exceeded 10 million pieces. Its long-term cooperative clients include internationally and domestically renowned leading beauty lens brands such as Bausch + Lomb, LENS ME, and MOODY. DSC Optical Technology is not only focused on the production and delivery of orders but also actively collaborates with its partner MOODY to co-develop pattern designs, further explore material upgrades for products, and delve into deeper cooperation in more areas.

For this round of financing,Founder of DSC Optical Technology, Li Jiayi"We hope to reduce the entry threshold for brands through professional and compliant one-stop flexible supply chain services for cosmetic contact lenses, allowing more standardized and high-quality cosmetic contact lens products to enter the global market. We aim to provide safe and fashionable cosmetic contact lenses to consumers in China and around the world, enabling every consumer to experience healthy, comfortable, and beautiful visual enjoyment."

Dr. Tian Li from Shenzhen Capital Group's Red Earth Healthcare Fund"It is noted that although cosmetic contact lenses appear simple in design, they embody sophisticated manufacturing technology with a high technical threshold. China's production of cosmetic contact lenses has long been constrained by supply chain bottlenecks, necessitating the urgent development of a high-quality, self-controlled supply chain alternative. As the only cosmetic contact lens manufacturer in mainland China holding FDA registration, DSC Optical Technology has gained widespread recognition from numerous domestic and international cosmetic contact lens brands, with its products selling well globally. We believe that DSC Optical Technology is a rare gem among domestic cosmetic contact lens suppliers and has the potential to become a leading global giant in cosmetic contact lens production in the future."

Shenzhen Capital Group Co., Ltd. (referred to as "Shenzhen Capital Group") was established in 1999 with funding from the Shenzhen Municipal Government and guidance for social capital investment. The company's mission is to discover and build great enterprises, committed to being an explorer and nurturer of innovative value. It has developed into a comprehensive investment group centered on venture capital, with a current registered capital of 10 billion yuan and total assets under management amounting to approximately 466.8 billion yuan. As of January 31, 2024, Shenzhen Capital Group has invested in 1,794 venture capital projects (covering 1,499 enterprises), among which 264 invested companies have been listed on 17 global capital markets (excluding the New Third Board).

References:

[1] The colored contact lens industry has both consumer and medical attributes, with rapid market development. —— Guotai Junan Securities

[2] The Beauty of Colored Contact Lenses Business: The Heart of Chip-making, the Profit Margins of Cabbage-selling, VCBeat Research Institute

[3] DSC Optical Technology, the "Smart Manufacturing Supply Chain for Cosmetic Contact Lenses," Secures Tens of Millions in Series A2 Funding from Nut Capital; The Mastermind Behind Cosmetic Lens Brands Possesses a Smart Manufacturing Brain, 36Kr