Investment helps Openface personalize skin care

23 Sep 2021 --- Last month, Lithuanian-based personalized cosmetics brand Openface announced it had raised US$380,000 in investment with the support of closed venture capital club Digital Disrupt. Openface was originally built as an IT company, and co-founder and CFO Natalia Martynova explains that the beauty technology brand’s main value is its “data and algorithm, as well as the fact that we can quickly receive feedback from the consumer and make changes to the product depending on that feedback.”

Openface decided to invest in and adopt artificial intelligence (AI) as its technology of choice. Detailing how AI works and why it is vital in personalized digital beauty, Martynova relays: “In order to identify elements of different skin conditions, modern machine learning detection algorithms are needed.” Machine learning (ML) is a part of artificial intelligence that studies computer algorithms to understand how experience and data can improve applications.

The advancement of technology is, and will continue to be, instrumental in personalization in digital beauty. “A project like Openface can only work effectively now, when the quality of smartphone cameras has increased and more and more ML models for image processing emerge,” Martynova details.

Bringing personalized digital beauty to life

Openface launched on to the digital personalization scene by first developing a testing methodology and an algorithm for ingredient selection. In the first iteration, these were collected according to the international dermatological associations' guidelines based on official tests that were carried out in the dermatologist's office. In subsequent iterations, Openface supplemented these tests with questions on lifestyle and daily habits that can also influence the data.

Click to EnlargeBacked by Digital Disrupt, Openface is branching out into new regions. Source: Openface.io.A dermatologist-oncologist worked on the methodology which was later tested and verified by analysts. During the methodology stage, Openface delved more broadly into the skin, exploring types such as oily, dry, combination and normal. Openface also analyzed skin health by working in detail with various conditions, including acne, dehydration, pigmentation, vascular and epidermal sensitivity. 

Openface then began looking for a factory that meets international good manufacturing practices (GMP) quality standards and has ISO certificates. In addition, the digital beauty brand needed a small tank for making formulas, which Martynova confirms “are not easy to find”. They then used raw materials from the US, Korea, Germany, France and Switzerland, working in partnership with suppliers including Croda, Rhodia, Firmenich, Cognis, BASF, Evonik, Sederma, Pentapharm and Nikkol. 

Testing over a thousand formula samples, Martynova details the principles the brand adhered to when developing its formulas as: 

• using ingredients with proven effectiveness,
• working with effective concentrations: “no marketing percentages of input, just to list the ingredient on the package” and,
• no complex formulas with a large number of ingredients. 

“At launch, we aimed to make money from day one,” Martynova confirms. “Therefore, while the development of formulas was still in process and we did not have a finished product, we collected leads and tested advertising campaigns, conducted interviews and sold pre-orders.”

Starting with one type of product, a serum, Openface’s first step was to test the underlying hypotheses and find a product-market fit. As the brand highlights, it now “understands clients better” following its research and is now launching additional products and expanding distribution channels.

Startup challenges in a challenging year

Like many others, COVID-19 has been the greatest disruption to enabling the startup to achieve its vision for personalized beauty, “2020 was a challenging year for our team,” Martynova confirms. 

“On the one hand, we are an online business that is not afraid of lockdowns,” says Martynova. “On the other hand, we did not have investments and we lived on what we earned. That is why we didn't invest in marketing and development, did not test hypotheses and grew slower than we would have liked.”

However, following its recent cash injection from Digital Disrupt, the startup now plans to invest the money in its development in new regions including Great Britain and Nordic countries, along with IT development and data markup by professional dermatologists. “The accuracy of models depends on the quantity and quality of markings,” Martynova shares. 

Commenting on available opportunities, Martynova relays: “In the future, we see ourselves as SaaS solutions for healthcare: software that helps dermatologists make diagnoses and patients get a second opinion. That is why we spend so much time marking up data by professional dermatologists.”

“However, it takes a lot of time and money to develop such a program, so we continue to collect data and grow revenue to become sustainable,” says Martynova. By continuing its ongoing conversations with its users, Openface is also able to understand exactly what they want, how they interact with a digital product and what problems arise.

Digital Disrupt investment strategy

With a focus on “smart investments'', Dinara Gazetdinova, advisor at Digital Disrupt, notes the closed venture capital club aims to “invest in projects that will really change the digital world, to support breakthrough solutions.” 

“When considering projects, what matters to us is the project team, its ideas and how we can help the project and what we can give,” Gazetdinova highlights. “It is not so much a pooling of capital as of the goals, efforts and opportunities that each participant puts in to make this or that idea take off.”

The venture capital fund’s project timeline is between three to five years. Investing in a data-based personalized skin care service is a reflection of Digital Disrupt’s interest in projects which have the potential for scaling and globalization, which already have sales abroad, or are aiming there. 

“We are partnering a lot with European and American funds to improve our competencies and financial resources,” Gazetdinova specifies. 

Martynova, meanwhile, wants skin care solution-finding to be “as easy as posting a photo on Instagram.” She concludes: “We also want our users to constantly feel supported and confident that Openface takes care of their skin, so there is no need to worry about it.” 

By Natasha Spencer-Jolliffe, BPC Insights Senior Journalist