Historically, cosmetic sales have remained resilient even during economic downturns, however, the COVID-19 pandemic presented a unique challenge, as restrictions and mask-wearing reduced consumers’ inclination to use makeup. This situation prompted beauty retailers to rapidly enhance their online capabilities, seeking innovative methods to attract customers in the absence of traditional in-store sampling. Technologies enabling virtual beauty try-ons, such as those pioneered by Perfect Corp., are becoming increasingly vital in this digital transition. The company announced today that it has secured $50 million in Series C funding, led by Goldman Sachs.

Perfect Corp., headquartered in New Taipei City, Taiwan, and under the direction of chief executive officer Alice Chang, is widely recognized by consumers for its YouCam Makeup application. This app allows users to virtually sample products from over 300 brands globally, including those belonging to major beauty companies like Estée Lauder and L’Oréal Paris. Since its launch in 2014, YouCam Makeup has grown to approximately 40 to 50 million monthly active users and has expanded its features to encompass livestreaming, tutorials from beauty influencers, social networking capabilities, and a “Skin Score” assessment.

Perfect Corp.’s technology also supports applications within physical retail environments, e-commerce platforms, and social media. For instance, their technology powered a new augmented reality try-on feature for Google Search, following its previous integration with YouTube’s makeup try-on functionality. They also collaborated with Snap to incorporate beauty try-on features into Snapchat.

This latest funding round brings the total capital raised by Perfect Corp. to around $130 million. Their previous funding announcement was a $25 million Series A in October 2017. The Series C funds will be allocated to further refine Perfect Corp.’s technology for omnichannel retail and to establish additional international offices, supplementing their current presence in 11 cities.

In an official statement, Xinyi Feng, a managing director within the Merchant Banking Division of Goldman Sachs, commented, “The incorporation of technologies like artificial intelligence, machine learning, and augmented reality into the beauty sector will generate substantial benefits, including amplified digital sales channels, enhanced personalization, and more meaningful consumer connections.”

Perfect Corp. will also participate in Goldman Sachs’ Launch with GS program, a $500 million initiative designed to support a diverse range of international entrepreneurs.

The company utilizes facial landmark tracking technology, which constructs a “3D mesh” over users’ faces to ensure a more realistic virtual try-on experience. Regarding data privacy, chief strategy officer Louis Chen informed TechCrunch that no user data, including images or biometric information, is stored, and all processing occurs directly on the user’s device.

The majority, approximately 90%, of Perfect Corp.’s clientele consists of cosmetic and skincare brands, with the remaining portion comprising companies selling haircare, hair coloring, or accessories. Chen explained that the objective of Perfect Corp.’s technology is to closely emulate the experience of trying on makeup in a physical store. For example, when a user virtually applies lipstick, they perceive not only the color but also the texture, such as matte, glossy, shimmer, or metallic – the company currently provides seven lipstick textures, a number Chen states is the highest in the industry.

Although makeup sales have declined during the pandemic, interest in skincare has increased. A September 2020 report by the NPD Group revealed that American women are purchasing a wider variety of skincare products and using them more often. To assist brands in capitalizing on this trend, Perfect Corp. recently introduced the AI Skin Diagnostic solution, which is validated by dermatologists and evaluates facial skin across eight parameters, including hydration, wrinkles, and dark circles. This tool can be integrated into skincare brand websites to provide personalized product recommendations.

Prior to the COVID-19 pandemic, YouCam Makeup and the company’s augmented reality try-on tools primarily appealed to Gen Z consumers who are comfortable with selfies and filters. However, the pandemic is accelerating the adoption of technology by beauty and skincare brands to cater to all shoppers. As a McKinsey report on the pandemic’s impact on the beauty industry noted, “the application of artificial intelligence for testing, discovery, and customization must accelerate as safety and hygiene concerns fundamentally alter product testing and in-person consultations.”

“Historically, depending on the brand’s geographic location, only 10% to 20% of their business was direct to consumer, with the remaining 80% flowing through retail distribution and established partnerships,” stated Chen. However, beauty companies are now investing more significantly in e-commerce, and Perfect Corp. supports this shift by offering its technology as a Software-as-a-Service (SaaS) solution.

Perfect Corp. has also adapted its offerings during the pandemic by providing remote consultation tools, enabling beauty and skincare consultants who typically work in salons or stores like Ulta to conduct virtual makeup demonstrations with clients via video calls.

“Everything we are developing now is designed to be interconnected,” said Chang. “It’s consistently combined with video-streaming.” This includes not only one-on-one consultations but also live-cast shopping, which is highly popular in China and gaining traction in other regions, as well as the augmented reality technology integrated into YouTube and Snapchat.