SouSmile joins Kaszek Ventures’ portfolio with investment worth over US$4.8 million

Contxto – The latest addition to Kaszek Ventures’ growing portfolio is the Brazilian healthtech, SouSmile.

Joining Quinto Andar, Liv Up, GymPass, as well as Nubank, SouSmile recently received a substantial R$20 million investment (over US$4.8 million) from the fund alongside other investors. These included Canary as well as Global Founders Capital.

Leading SouSmile are Natalia Lombardo, Andrea Nazaré, Alexandre Gama, Ornella Moraes, Michael Ruah and Aline Andrade. Equipped with new funds, the healthtech intends to expand in its native Brazil. With four clinics as of today, it would like to debut five more locations before the end of 2019.

“We are delighted to have Kaszek as a partner and be able to count on their knowledge of creating and scaling innovative brands that are loved by customers,” said Ruah.

Similarly, the healthtech plans to invest funds into new technology and hiring. Although SouSmile hasn’t shared its revenue, this December it expects to increase sales by fifteen-times compared to December of last year.

Tech innovation

Through SouSmile, Brazilians have affordable modern means for aesthetic dental treatments. Beginning only a year ago, the company leverages 3D scanning, panoramic x-rays, as well as orthodontic photos during the assessment. In the end, clients receive customized transparent molds to realign their teeth.

Due to this innovative process, SouSmile offers its product for a single price of R$3,850 (close to US$940), which can be paid in up to 12 installments. 

Just like braces, this product is particularly useful when it comes to improving teeth alignment and spacing. The only difference is no invasive treatments or painful pieces of metal installed in your mouth. Even better, the process normally lasts between three and nine months. 

Another difference is that orthodontists create treatment plans via software. Patients can even see what their smile will look like with simulations. This process has certainly wowed investors. 

“We spoke to a number of companies in the industry and were very impressed by how SouSmile uses technology to deliver innovative customer solutions,” said Kaszek Ventures partner, Santiago Fossati. 

According to SouSmile’s LinkedIn, “we are a combination of brand, tech company and retailer which allows us to offer our products at an accessible cost in a modern and innovative way.”

The blur between tech and traditional businesses

While clearly there’s some innovation and software within the process, some concerns are arising regarding its “techiness.” For many, SouSmile may be just another orthodontist company developing clear braces.

Nowadays, companies like SouSmile and WeWork are certainly blurring the lines between what truly makes a technology company. Regarding WeWork, it recently projected a US$47 billion valuation when issuing its S-1 filing for a prospective IPO.

Since such high valuations typically go towards full-blown tech companies, this number certainly concerned potential investors who ultimately passed.

In the end, WeWork lowered its expectations to a smaller US$5 billion valuation. At the end of the day, it simply doesn’t embody certain tech features. These include low-variable costs, low capital investments, economies of scale, digitalized customer data, networking effects, not to mention overall ecosystem disruption.

On a similar level, SouSmile lacks those aspects as well, at least in my opinion. Right off the bat, the company’s dependence on physical spaces seems to override its technological components. For example, patients must be physically present in one of SouSmile’s clinics to benefit from the service.

With such an arrangement comes many overhead costs such as rent, utilities, maintenance, insurance, etc. So many expenses certainly challenge aspiring tech companies to leverage new technology and exponentially grow.

All things considered, I’m curious to know what a VC firm such as Kaszek Ventures identified in SouSmile’s business model, specifically in terms of scalability.

-JA