B2B Marketplace of Sustainable Suppliers Gains Funding, Looks to Expand

When Kimberly Shenk began developing a line of personal care products that were better for health and the environment, she quickly discovered that it was very difficult to get information about the ingredients and raw materials that went in them.

That lack of transparency — alongside her expertise as a data scientist and personal passion for healthy living — led her to begin work on Novi, a B2B marketplace that enables buyers and sellers of ingredients and packaging to transparently browse buy the materials they need.

Fast forward to the present, and Novi Connect’s marketplace lists more than 85,000 different materials, including oils, surfactants, fragrances, stock formulas and packaging components. The company also just raised $10.3 million in Series A funding and is looking to move into other verticals where customers want to see the use of safe and sustainable materials.

Read more: Sustainable Supplier Marketplace Novi Raises $10.3M

Founded in 2019, Novi currently focuses on the materials needed to develop personal care products such as toothpaste, hair care and cosmetics, and connects brands, retailers, suppliers and manufacturers.

“It’s the whole gamut of everything inside and outside the bottle that a brand uses to develop a product,” explained Shenk, co-founder and CEO of the company.

Nonprofits, retailers or other organizations have vetted all the materials as being good, clean or sustainable. Novi ingests those definitions and encodes them so that when suppliers give them data, they can use it to vet and verify if it meets a third-party standard.

“It’s really important that Novi doesn’t come at this with an opinion,” Shenk said. “We partner with third-party experts and scientists who have certifications or industry-wide recognition for having definitions of sustainable or environment or health approaches.”

The platform currently includes more than 85 certifications, including responsibly sourced, vegan, cruelty-free and other certifications brands care about.

Novi works with hundreds of brands, suppliers and retailers, including Shiseido, Target, Sephora, Credo and Dow. The company reports the network of its customers grew 300 percent in the first half of 2021.

Solving a Problem

Before co-founding Novi, Shenk experienced firsthand the difficulty of sourcing products that met these standards. In 2017, she co-founded a company to build a consumer brand that used data to bring better products to market.

“It was very, very difficult to get transparency on any materials,” Shenk said. “There were no mechanisms in place to go out and source materials and we were trying to solve a problem for ourselves.”

That led to the founding of Novi. With a background and career in data science and machine learning and a side passion in health and wellness, Shenk saw that the problem was data at its core and she could use her skills to bring this kind of solution to market.

As Novi was in development, Shenk saw that brands often hire consultants to track down suppliers and understand. After the product’s been made, they try to learn about the materials and processes used.

“I just envisioned a world of, ‘Hey, why can’t we just do this from the get-go? Why can’t we just source from a transparent way and not spend all this money and time on the backend trying to figure this out?’”

Sourcing Better Materials

Now, with Novi, third-party manufacturers use the platform to source better materials on behalf of the brand; retailers use it to encode their standards and disseminate them to ensure wider adoption, and suppliers use it to showcase and list their materials in front of brands who are actively developing on the platform.

The platform offers benefits for each category of user. Brands can formulate new products with materials that meet any standard they require. Brands, manufacturers and suppliers can reduce the cost of regulatory work and the amount of back-and-forth by working through Novi. Suppliers enjoy greater discoverability of the ingredients they offer. Retailers get help seeing that vendors adhere to corporate policies.

For buyers, it’s free to access the search and discovery element of the marketplace so they can find materials that are pre-vetted against the different standards. They can also sample and purchase them.

With an upgrade, additional offerings such as financing options and product portfolio management enable a brand and its third-party contract manufacturer to develop products on the platform.

For suppliers, too, it’s free to list their materials and get them in front of brands.

With procurement, as brands purchase materials on the platform, Novi takes a cut that Shenk says is significantly less than what suppliers pay when using other channels to distribute their materials to brands. Buyers can pay with credit cards or Novi will facilitate a purchase order.

“We’re actually giving them a direct connection to brands purchasing at a much lower cost,” Shenk said. “So, you see actually a lot of suppliers who tell the brand to go to Novi to make the final purchase because it streamlines the process. It’s a lot cheaper for them.”

With the new funding, Novi will expand into new verticals while building out in the personal care and beauty category. The new verticals include home care products, such as detergents and soaps; food; building materials; and electronics. Safe and sustainable materials will be the focus when serving these verticals too.

“They’re just lagging a little bit in consumer demand but we’re already starting to see things like we know there’s formaldehyde in our carpets and there’s really toxic chemicals in our children’s toys,” Shenk noted. “So, there’s an up-and-coming movement as we think about all the products we consume.”

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