(Gemma Labs Photo)

A Seattle startup is using algorithms and a direct-to-consumer model to take a slice of the U.S. haircare market.

Gemma Labs just raised $3.5 million to fuel growth of its custom shampoo and conditioning product that has surpassed $1 million in annualized sales since September.

The startup uses in-house scientists to concoct special shampoos for individual customers, based on surveys they take that assess individual hair and scalp needs, in addition to seasonal factors. Customers answer questions about hair type; structure; length; color; density, and more.

The shampoo and conditioner set costs $45, or $36 with a subscription.

“Consumers have had an overwhelmingly positive response to the products,” said Gemma Labs CEO Allison Harr. “The seed financing will be used to further accelerate growth within the $25 billion haircare market and reach more customers across the U.S.”

The company has seen an uptick in sales since the COVID-19 outbreak and social distancing mandates.

“We’ve seen that consumers are buying more and more online — and even more so, of course, in this current situation,” board member Mike Galgon said in a statement. “In this category, buying online is such a natural step because the consumer can actually get to better product selection with companies like Gemma by having personal data-driven recommendations. It’s actually a superior solution to buying at a retail shelf for now and in the future.”

Competitors include New York City-based companies Prose and Function of Beauty.

Direct-to-consumer brands have flooded various industries over the past decade, challenging incumbents with efficient e-commerce models. But recent struggles from companies such as Casper and Brandless show how the DTC world has evolved. Harvard Business Review highlighted omnichannel, vertical integration, unit economics, and community as key focus areas for the new wave of DTC.

Harr joined PSL as an entrepreneur-in-residence last year. She was previously a marketing director at companies including Vestar Capital’s Sun Products; Unilever; and American Express.

Another PSL spinout, NextStep, also raised more funding Thursday.

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