As consumers, we often take for granted the ease and convenience by which we can discover, research, and purchase goods across all facets of our lives. Online marketplaces like Amazon, streamlined ecommerce experiences powered by Shopfiy, and the underlying personalization engines have effectively removed all friction associated with “buying.”
But across most B2B industries, things look much different. New products are discovered via trade shows, costly sales reps, or paper catalogs with disguised pricing. Transactions are costly and intermediary-driven, often handled via offline payments. Data is non-indexed, stored in physical notebooks or antiquated ERP systems.
While we’ve seen marketplaces emerge across goods and services, the opportunity in the $5T raw materials market remains largely unaddressed. And the strongest catalyst for change in this broader market is around clean, transparent personal care. This is a boardroom-level topic across the top CPGs, yet the default way of discovering and purchasing new materials — especially safe/sustainable materials — is combing through paper catalogs, requesting samples, working through intermediaries, testing and retesting formulations, often on a multi-year timeline. Furthermore, as retailers face these same consumer demands, there is no easy way to assess which products meet or don’t meet spec.
The concept of a B2B marketplace is not new, yet we — at Greylock — think the timing is ripe to double down on vertical marketplace models across industries. Brands and suppliers are undergoing generational transition and are no longer accepting the status quo of slow, opaque transactions. As markets become increasingly global and fragmented, the notion of doing business over handshakes and sales outings becomes untenable. And the advancement of embedded fintech solutions opens new revenue streams for these marketplaces. Novi, Greylock’s latest marketplace investment, is at the forefront of this for the raw materials industry.
Novi is the first B2B marketplace to help brands build and manufacture transparent products. I’m excited to share that Greylock led Novi’s Series A, and I’ve joined the Board of Directors alongside Jaleh Bisharat and Brian Rothenberg.
Before starting Novi, founder and CEO Kimberly Shenk lived this problem first-hand, having started a clean beauty brand with Jaleh Bisharat after leading data science at Eventbrite. Rather than accepting the status quo of the industry, Kimberly reframed the opportunity as a data science problem and built the industry’s first algorithmic “vetting engine” to help brands, retailers, and suppliers assess which products meet various clean/sustainable specifications. This creates a powerful growth loop: retailers create their criteria in Novi and invite brands to upload their product catalogs to compare against spec, after which suppliers are on the network to meet new customer demand.
When we invest in B2B marketplaces, we look for founders who have deep empathy for the industry, combined with a software-driven insight for how to bring the industry forward. Kimberly embodies this. She built the original vetting algorithm for her own problems, and evolved it into a three-sided network as she built alongside her customers and partners. Starting with indie and DTC brands, Novi has expanded to work with some of the largest names in the industry — from Credo and Drybar on the brand side, to Sephora and Target on the retailer side, and Dow and Croda on the supplier side. The network effect is real. Customer growth was 300% in the first half of 2021, and suppliers and brands are already asking to pull Novi into new verticals beyond beauty and health.
Novi helps brands build better products. As Novi reinvents this supply chain, brings the broader market online, and guides the industry’s push toward sustainability, I’m thrilled to partner with Kimberly and team on this journey.