SmileDirectClub Secures $380 Million Series C Funding for Innovation, R&D, and Global Expansion

Recently, VCBeat (WeChat Official Account: vcbeat) learned from foreign media that SmileDirectClub, a startup specializing in clear aligner therapy, announced it had secured $380 million in financing, reaching a valuation of $3.2 billion. In this funding round, the lead investor was the private equity firm Clayton, Dubilier & Rice (hereinafter referred to as CD&R), with participation from Kleiner Perkins and Spark Capital. As part of the transaction, Rick Schnall, a partner at CD&R, will join the board of directors of SmileDirectClub upon completion of the financing.

SmileDirectClub Physical Stores (Image from Official Website)

SmileDirectClub is a direct-to-consumer clear aligner company headquartered in Nashville, Tennessee, USA. The company connects licensed dentists with orthodontic patients through teledentistry diagnostics and has launched a remote open program that facilitates virtual office visits for prescribing and monitoring treatment. This approach enables the provision of aligner therapy at less than half the cost of traditional channels, while still ensuring standards of care through its affiliated licensed dental professionals.

In 2013, Jordan Katzman and Alex Fenkell decided to found SmileDirectClub and clarified its core concept and service philosophy. In 2014, they co-founded SmileDirectClub with David Katzman and Doug Hudson, with the original intention of providing a more affordable and effective solution for teeth straightening. Currently, SmileDirectClub claims to hold 95% of the at-home clear aligner market, having helped 250,000 people improve their dental aesthetics and health.

Given the current circumstances, CD&R’s investment in SmileDirectClub is a prudent move. In October 2016, SmileDirectClub entered into a partnership with Align Technology, the giant of the clear aligner industry, securing an exclusive supply agreement for Invisalign aligners. Furthermore, since its establishment in 2014, SmileDirectClub has continuously expanded its scale. To date, the company has conducted over 300,000 training sessions, grown its workforce to more than 3,200 employees, and achieved steadily increasing profitability.

For SmileDirectClub, this is an industry with immense long-term growth potential. As living standards continue to rise, a growing number of people are paying closer attention to their health and appearance, seeking new ways to improve their dental health. SmileDirectClub has stated that following this round of financing, it will be even more dedicated to serving its consumers.

Alex Fenkell, co-founder of SmileDirectClub, stated, “It is an honor for SmileDirectClub to secure this round of financing. The company’s mission is to provide an affordable, high-quality solution for everyone seeking orthodontic treatment. We will continue to expand our business scope and extend our premium services to a broader audience.”

Following the completion of the financing, SmileDirectClub plans to allocate the funds toward innovation, research and development, and international expansion, with the aim of further scaling its operations and broadening its business scope. Unsurprisingly, SmileDirectClub’s moves in international expansion are expected to draw significant attention from the entire industry; however, the company has disclosed few details regarding its specific next steps.

Clayton, Dubilier & Rice (CD&R), founded in 1978, is one of the oldest private equity investment firms globally. It manages investments in 52 companies, primarily targeting subsidiaries or divisions of large, diversified corporations across a broad range of industries, with total transaction value exceeding $80 billion. Its investment strategy aims to build stronger, more profitable businesses to maximize value.

Kleiner Perkins Caufield & Byers (KPCB), founded in 1972, is one of the largest venture capital firms in the United States. Over its 35-year history, KPCB has invested in and supported 475 startup companies, including America Online (AOL), Amazon, Compaq, Google, Intuit, Juniper Networks, Netscape, Lotus Software, and Sun Microsystems. More than 150 companies in KPCB’s portfolio have successfully gone public. In April 2007, KPCB established a venture capital fund in China with a total size of $360 million, aiming to support Chinese entrepreneurs and foster innovation in high-growth industries.

Spark Capital, founded in 2005, is a venture capital firm primarily investing in internet and mobile internet-related sectors, such as advertising and payments, commerce and services, content and media, financial services, hardware and infrastructure, and mobile internet and social networking.