With its recent $51 million in investment capital, Novi, a B2B marketplace for sustainable and clean ingredients and eco-packaging, is set to change the way we shop.
The brainchild of MIT graduate and Air Force veteran Kimberly Shenk, Novi announced a $40 million raise in February—its second in six months—bringing total funding to more than $51 million for its innovative sourcing platform for clean and sustainable ingredients. Funding comes from Tiger Global, Greylock Partners, and Defy Partners.
$51 million is a lot for a company to raise in six months, particularly for one that launched in the middle of a pandemic. But the platform has taken off, bringing consumer brands closer to sustainable materials through a network of suppliers, manufacturers, retailers, and brands. Novi already counts Sephora, Target, Smashbox, Seventh Generation, and Unilever as clients.
Shenk, who worked at Eventbrite and Domino Data Lab before stepping out on her own, started the clean skincare brand Naked Poppy in 2017. The biggest challenge there, she said, was finding the clean and sustainable ingredients.
“I have always been passionate about clean products and sustainability, and understanding the chemicals in the beauty and personal care products that I use,” Shenk told Ethos via email. She says after launching Naked Poppy, she discovered how difficult it was to find data on the chemicals being used and to develop better, more transparent products. “Trying to solve this is what ultimately led me to start Novi,” she says.
It wasn’t a lack of ingredients, she said, it was the limited access to the data.
Shenk compares Novi to the real estate platform Zillow. But instead of homes for rent or sale, Novi is driving the accessibility and transparency in the chemical industry, helping both brands and manufacturers make transparent products now high in demand.
Novi partners with emerging brands, established retailers, and “everyone in between” to help make the development of products more transparent and sustainable, Shenk says. “Our B2B marketplace enables brands to design and purchase verified formulas, fragrances, and packaging—all with the purchasing power of a large CPG.” Novi gives its customers access to more than 100 sustainability standards and claims, which Shenk says allows brands to guarantee their finished products “align with their values and are better for people and the planet.”
Shenk says sustainability is an industry-standard, and that consumers weigh the impact of a product before they make a purchase. This is happening across a range of industries, from travel to high-ticket purchases like jewelry to luxury homes.
“Brands are now choosing alternative bases that are more sustainably produced and harvested,” Shenk says. “Impact matters just as much as a product’s efficacy for consumers now. With sustainable packaging, they want to see brands divest from single-use plastics and thoughtfully design around waste. The classic ‘up-cycle your glass jar’ model simply won’t do as design embraces bioplastics, recycling programs, and refillable options.“
She says streamlined, personalized shopping and self-care routines have taken center stage. The emergence of AI and other technologies is transforming shopping into a “seamlessly virtual retail experience,” Shenk says. “Some brands are harnessing tech to develop personalized products like hair care systems and foundations. It’s a novel way to interact with brands consumers know, as well as discover new brands. Virtual try-ons also mitigate waste by reducing in-store product sampling and shipping-related emissions from returns and exchanges.”
But she says while sustainability matters, transparency matters even more. “It’s not enough to build a quality product—consumers want to know how it’s made and how a brand is committed to making it better. “They seek out brands openly educating on why they use—and don’t use—certain ingredients, design choices, and more. From sourcing ingredients to packaging, each stage of a product’s creation is a marketing opportunity to connect with consumers.”
Sustainable ingredient access
The Novi platform is unique in the household and personal care industries, allowing brands, particularly smaller brands, to not just discover and purchase products, but to formulate with clean ingredients and eco-packaging to help build a sustainable product from the start.
“Each ingredient comes and is manufactured by a different supplier; it becomes hard to track down if ingredient ‘A’ from supplier ‘4’ is compliant with ‘x’,” Shenk recently told Forbes. “Imagine as a [company] doing this across 100s of products. Brands can’t actually move forward at the pace they want. We think this is a time for modernizing.”
In a statement announcing the new funding, Shenk says that pre-Novi, brands would spend weeks hunting down materials and interpreting disparate material documentation “to determine if they met complex industry standards”, she said.
“Novi collects, digests, and digitizes all of this data, ensuring real-time accuracy against ever-changing standards and claims, which allow our users to make procurement decisions around sustainability more efficiently and with confidence.”
Shenk tells Ethos that Novi is purpose-built for small to mid-size indie brands. “But we’ve heard a desire for increased transparency from larger brands too, a number of which have become active users of our platform,” she says.
Now, the company is launching its first publicly available ingredient screening tool that it says gives customers the ability to instantly vet product ingredients. The ingredient screener analyzes databases including Sephora’s Clean at Sephora, the Environmental Working Group’s Verified program, and Certified Vegan brands.
The company says its number of consumer brands has grown nine-fold in 2021, fueled by partnerships with retailers including Credo and Grove Collaborative. Novi says its target of small and mid-sized businesses are embracing the platform’s ability to make sustainability more accessible.
“The growing need for brands to find and source reliable materials that have been independently vetted by Novi for more than 100 sustainability standards has also led to significant growth in our supplier partners, big and small,” Shenk says. “We have no doubt that our supplier base will continue to grow exponentially through 2022.”
Croda, a global specialty ingredient supply company with a focus on sustainability, and Novi supplier, says it gets new leads from Novi “every week,” according to head of the North American Market, Donna Petretti. Croda achieved Platinum status from EcoVadis. It was in the top one percent of more than 75,000 companies assessed by EvoVadis across a range of sustainability standards, including those set by the United Nations Global Impact and ISO 26000.
“Every week we are getting new Indie leads from Novi for customers who want to formulate with our sustainable ingredients” said Petretti. “This type of platform delivers true transparency and is the future of the beauty industry,” she said.
“There is no other platform or tool like this,” Shenk says. “Novi is the first data-driven platform for building transparent products, a first in the B2B market. We are the first network to use data to connect a complex ecosystem of suppliers, manufacturers, and retailers to help brands easily discover, sample, buy and manage materials when building transparent products.”
Shenk says Novi’s vast dataset and Artificial Intelligence have “had a hand in” formulas and packaging of thousands of beauty and personal care products that are both clean and sustainable.
“Before Novi, brands would spend weeks finding materials and interpreting different material documents to determine if they met complex industry standards,” Shenk says. “Novi collects, digests and digitizes all of this data, ensuring real-time accuracy against ever-changing standards and claims, which enables our users to make purchasing decisions around sustainability more efficiently and with more confidence.”
The surging demand for sustainable products
“Consumer demand continues to grow for greater transparency in the sustainability and health impacts of everyday products,” said Griffin Schroeder, Partner, Tiger Global. “Novi has built a unique data-driven sourcing platform for brands, suppliers, manufacturers, and retailers to easily identify sustainable ingredients in their products and packaging.”
Novi is currently free for brands to research ingredients, suppliers, and other data on sustainability. There are premium pay-to-play options too that assist with building new products.
Shenk says clean and sustainable beauty is no longer optional, “it is essential.”
“Sustainable solutions were important even before COVID-19, but the pandemic accelerated consumer demand for better-for-you formulas,” she says.
“Dovetailing with that is the ongoing evolution of wellness, self-care, and a holistic approach to beauty. The entire beauty space is moving forward and listening to the growing demand for clean products. If they don’t keep up, they will get left behind.”
The announcement comes as demand for clean and sustainable personal care and household products are at an all-time high. Globally, the clean beauty market is estimated to reach $22 billion by 2024, according to Statista. And for household items like cleaning products and laundry detergent, the market value is expected to surpass $27 billion by the end of 2024, growing at a CAGR of 6.5 percent.
“Now more than ever, the emergence of new technologies has the potential to transform our lives, make the planet a better place, and transform our path from unsustainable to sustainable,” Shenk says.
“As the beauty industry evolves, I have no doubt that the focus will remain on diversity and inclusion, sustainability, data, transparency, and consumer behavior, and that these factors will forge the way forward,” she says.
Shenk believes that product lines that fall short of the expanding definition of beauty will leave brands struggling to connect with consumers. “Brands can further champion diversity and inclusion by using universal design principles in their product design. Brands that make beauty more accessible will become trailblazers in this valued space, and further expand the market for their products.”
Shenk says the company is building additional technology “for both sides” of the marketplace in order to comply with “evolving sustainability claims,” as well as growing the selection of ingredients, fragrances and packaging. The platform is also working to expand into new verticals like home care and food.
“Consumer demand for clean transparent products is pretty much the most significant trend in the consumer goods category at large,” Shenk says. “Approximately 85 percent of consumers are demanding it. It is forcing large antiquated brands to rethink their entire supply chain,” she says.
“We are the future of transparent sustainable products. The first global platform that gives brands this data-rich experience in order to develop these products end to end.”