MERRIMACK, NH - (July 17, 2008) - Aesthetics company Eleme Medical Inc. has raised $18 million in Series C financing to fund the recent launch of its anti-cellulite device.
New investor L Capital Partners led the round, joined by new investor Hambrecht & Quist Capital Management and existing investors EDF Ventures and Three Arch Partners. Valuation was not disclosed.
Based in Merrimack, N.H., Eleme incorporated in 1996 and began its business in 2000 as SmoothShapes, which is also the name of its device. The SmoothShapes system uses lasers and light-emitting diodes along with rollers to liquefy and eliminate fat cells, smoothing out the skin in the process.
"We commenced selling in the second quarter of this year," said Nancy M. Briefs, president and chief executive of Eleme. "We are now preparing for our international launch in September."
Briefs said that with current sales projections, Eleme should reach profitabili ty in seven to eight quarters with this funding.
Like many aesthetics companies, Eleme relies heavily on out-of-pocket payment by patients for treatment at a doctor's office. But despite the recent downturn in the economy, Briefs said she is not worried with this revenue model. "It might be a problem if you're competing in a mature market like hair removal," she said. "But until the last couple of years, there haven't been any real non-invasive technologies for cellulite or fat reduction."
At around $2,000 for a series of treatments, Briefs said the SmoothShapes system is about half the price of invasive approaches like liposuction. She said she also believes that the demographics of the clientele work in Eleme's favor. "They tend to be younger women, 25 to 40," she said. "This is a generation that doesn't just want to grow old gracefully."
Briefs said she believes that the company, which has 54 employees, could become a potential initial public offering candid ate in the next several years, and that is one of the reasons she tapped a larger investor base for this round.
In early 2007, Three Arch Partners provided $14.5 million of Eleme's $15 million Series B, with EDF providing the remainder. "We wanted to spread the investor base," Briefs said. "When the [IPO] window opens, we wanted to have a broader base." In particular, she said that Hambrecht & Quist, which has a substantial portion of its investments in public companies, will be able to help the company navigate the public markets in a shaky IPO environment.
Briefs also said she expects to release a device for a second, undisclosed body shaping indication by the end of 2010.
As a result of the financing, Ting Pau Oei, partner at L Capital, and Daniel R. Omstead, president and CEO of Hambrecht & Quist, will join Eleme's board.