Braces, Bottlenecks And The Billion-Dollar Fix

The Hard Lessons Behind the Shift to Modern Orthodontic Care

SmileDirectClub – once a high-flying DTC (direct-to-consumer) orthodontics startup – serves as a cautionary tale for healthcare investors. Founded in 2014, it raised nearly $400 million before its 2019 IPO, where it secured $1.3 billion and reached a valuation of almost $8.9 billion. Major backers included Clayton, Dubilier & Rice, Kleiner Perkins, Spark Capital, and an early strategic investment from Align Technology, maker of Invisalign.

Despite this heavy-hitting roster, SmileDirectClub collapsed in late 2023 under the weight of nearly $900 million in debt, shrinking revenues, $63 million in legal liabilities tied to its partner Align, heavy marketing costs (around 59% of revenue), and a regulatory storm fueled by subpar outcomes and lawsuits. The company filed Chapter 11 in September 2023. By December, after failing to secure fresh investment or viable buyers, it proceeded with liquidation.

Compounding the collapse:

• Investors dramatically overestimated scalability, left, holding a burnt-capital stack.
• Align's patent arbitrage and non-compete issues cost them $43 million.
• Promises of consumer convenience masked clinical risk, undermining trust.

Other DTC competitors also struggled: Byte was absorbed by Dentsply Sirona, while Candid abandoned its DTC angle entirely, pivoting toward provider-delivered services instead.

For savvy investors, the lesson is clear: orthodontics cannot be scaled on convenience alone. The viable path forward lies in integrating clinical expertise, regulatory compliance, and digital tools, not bypassing them. Future investment should favor companies that partner with or empower practitioners, not those undermining established medical workflows.

An Emerging Path to Sustainable Scale

By comparison, Impress, founded in 2019, has taken a more measured route, as we can see in a retrospective. Backed by investors including CareCapital, Norgine Ventures, LBO France, Trinity Capital, TA Ventures, and more, the company has raised over €110M (via equity and debt), including a $125M Series B. Impress integrates AI-driven treatment (via its TxP platform), in-house orthodontists, and a SaaS platform for partner clinics. The clinician-led, tech-enabled, and scalable – model has allowed them to maintain profitability in the majority of their clinics and avoid the pitfalls that felled its DTC predecessors. 

Other orthodontic startups are also exploring new approaches. Uniform Teeth (now part of CandidPro) initially launched with its own hybrid model before being acquired and integrated into Candid's provider-facing platform. Zenyum, based in Asia, combines telehealth with in-person diagnostic partners across markets like Singapore and India, targeting middle-income consumers with a mobile-first approach. SunClear Aligners and PlusDental (acquired by DrSmile) have also attempted to build regional hybrid or DTC models in Europe. These players — some pivoting, some consolidating, reflect a broader recalibration in the space, as the market shifts away from pure-play DTC toward tech-backed, clinically grounded orthodontic solutions.

Investor Takeaways

The failure of SmileDirectClub highlights several key lessons for investors: clinical guardrails are essential, as bypassing provider oversight can lead to regulatory and legal collapse. Furthermore, prestigious funding alone doesn't guarantee sustainability, as even high-profile backers couldn't prevent operational breakdown. Finally, hybrid, integrated care models, which combine physical clinics, AI-driven treatment, and diversified capital support, offer a more resilient and scalable path forward in healthcare.

This shift in orthodontics reflects a larger transformation underway across the healthcare market. Globally valued at over $10 trillion, healthcare remains one of the most capital-intensive yet inefficient industries, characterized by fragmentation, rising patient demand, workforce shortages, and access disparities. As a result, investors are increasingly drawn to verticalized, tech-enabled platforms that streamline care delivery, reduce overhead, and improve patient experience. The push toward hybrid models — combining physical infrastructure with digital tools and AI-driven workflows, is gaining traction not just in dental and orthodontics, but also in areas like primary care, mental health, dermatology, and chronic disease management. The key to scalable success lies in building digitally augmented, clinically integrated ecosystems — and the winners will be those who balance innovation with trust, compliance, and outcomes.

Going forward, we can expect to see more of these tech-enabled, clinician-led models emerge not just in orthodontics, but across broader healthcare segments – from dermatology to diagnostics to chronic care, as investors seek scalable solutions that balance innovation with clinical rigor.