How Far Can D2C Unicorn Perfect Diary Go with New Capital?

What Happened:

The Chinese cosmetic brand Perfect Diary is now valued at $2 billion with a capital infusion of $100 million, according to Chinese tech media 36Kr. The lead investor of this latest round, New York-based Tiger Global Management, has also invested in Glossier, the American direct-to-consumer beauty brand, last year.

Investors, however, had to fight over each other to get in this round, according to 36Kr. Other than private equity and venture capital firms, L’Oreal also reportedly showed interest in the possibility of acquiring the hot C-beauty brand in late 2018. 

Founded in 2017, Perfect Diary has become a popular beauty brand for Chinese millennials and Gen-Zs, which the brand targets mainly online with its accessible price points and effective social marketing. Take it’s best selling item on e-tailer Tmall, a lip gloss that goes for about 50 yuan (around $7). The brand sold 13.2 million of this single product alone. Other popular items include themed eyeshadow palettes that were born of crossovers with National Geographic and China’s top livestreamer Li Jiaqi.

Jing Take:

It’s only been about six month since Perfect Diary’s last round of new funding in September, which, at the time, managed to boost the brand into the “Unicorn” club. With a reported strategic plan to open more brick-and-mortar stores in China, it appears that much of the new capital will be spent on the brand’s expanding store footprint. 

capital

Inside a Perfect Diary store before the COVID-19 outbreak. Photo: @Jufanzi/Little Red Book

Before the COVID-19 pandemic, the direct-to-consumer brand had already opened over 30 stores in cities like Shanghai and Guangzhou, which have been endorsed by the brand’s own virtual influencer “Xiao Wanzi.” Furthermore, it has pledged to open 600 stores in three years, with most of them in second- and third-tier cities. 

As the face of the C-Beauty brands, Perfect Diary certainly doesn’t lack an audience. The question now is whether the brand can spend its new infusion of money steadily and wisely, to avoid falling victim of their projected rapid expansion.

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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