What leads an “original shark” from entrepreneurial-based American reality TV show Shark Tank to smell blood and invest in an Indian startup? A chance meeting, a timely pivot, and a fair amount of gumption.
Kevin Harrington and his group of investors have invested an undisclosed amount in Delhi-based ProductX Ventures. This is the first Indian investment for Kevin, who is the also the founder of As Seen on TV and claims to be the “inventor of the infomercial”.
Shark Tank features a panel of potential investors—called “sharks”—who consider pitches from aspiring entrepreneurs seeking investments for products or businesses. Deals are finalised on the series, which has completed 10 seasons and been streamed on various networks across the world.
But interestingly, ProductX Ventures didn’t get funding from an appearance on the show; the pre-Series A round was a personal investment by Kevin Harrington.
Delhi-based ProductX Ventures was started by three serial entrepreneurs--Aastha Almast, Mani Dev Gyawali, and Charak Almast, last year. It offers a variety of unique and curated products in categories such as lifestyle (food, beverages, healthy snacks, accessories, handicrafts), wellness (health food and drinks, nutritional supplements, energy bars, protein snacks), personal care (organic cosmetics, skincare, grooming, and essentials) via The New Shop, its chain of retail shops.
“The New Shop only offers unique ‘made-in-India’ Consumer Packaged Goods (CPG),” says Aastha Almast, Co-founder of ProductX Ventures.
The New Shop , owned and run by ProductX Ventures, is a chain of offline retail stores at alternative distribution locations, like co-working spaces and offices, where customers can try and buy new and unique FMCG products that “are curated to be relevant to that target audience and yet cannot be found anywhere else, like a store of wellness products in a gym,” Aastha adds.
The New Shop exclusively partners with Indian FMCG companies that manufacture a variety of products, and offers them an opportunity to increase their consumer base through retail. “We are solving the problem of distribution and discovery of consumer products across India and bringing the best of the products directly to the consumer,” Aastha says.
The New Shop at present has over 35 active stores in Delhi-NCR, and aims to have 200 stores by October this year in the region. In the next phase next year, the startup will be expanding in metropolitan and tier 2 cities.
The New Shop is of strategic interest to Kevin, who will use it as a channel to vet good Indian consumer products for investment and distribution in the US, she says.
“Also, Kevin will use the distribution reach of ProductX Ventures to reach out to their client base with Shark Tank products. Kevin will also aid the company in its international expansion at later stages,” Aastha adds.
The ProductX Ventures co-founders believe that Kevin will not just bring in the money, but “everything else”. “Kevin brings a host of expertise in building and scaling consumer products, the art of selling, and retail, and will be a mentor and partner to the young entrepreneurial founders of The New Shop,” Aastha says.
Giving context as to why Kevin chose this startup to enter India, Aastha says, “This is a journey from the online world to an offline one.”
She reveals that she and the other two co-founders have been professionally together for seven years. “We started our journey in 2012, when we founded a game development company and made a few early smartphone games. We then founded a content discovery platform, which pivoted to an online reputation management company in 2015. We successfully exited this company in 2017, to find the next big opportunity with ProductX Ventures in 2018,” Aastha says.
Interestingly the startup was born after the co-founders met Kevin Harrington at a conference in Las Vegas in 2016 where many entrepreneurs were pitching their FMCG products. The trio was running a hard core technology company (the content discovery platform) then and wanted to get influencers like Kevin on board to create content around consumer products and sales.
But a meeting with Kevin and his group of investors at the conference changed the course of their startup.
Astha says a new door opened in the co-founders’ minds when they heard Kevin “talk passionately about the pleasures and emotions that physical goods bring to people’s lives”. The meeting also led the three friends to realise that “our country is an ingredient and resource-rich country capable of producing products that can only be made in India”.
“We returned to India with our heart full of respect for non-tech entrepreneurs,” Aastha recalls.
By then they had pivoted their company--Smartican--to an online reputation management business.
“Some of the companies we worked for were large retailers and direct selling companies, which were constantly struggling to beat the competition.
For the CPG entrepreneur
"We learnt from them that what keeps them ahead is the launch of blockbuster, very unique products before others. But, they were not able to find enough such products,” Aastha says.
She explains that the problem of product discovery for these large retailers is actually born out of the CPG entrepreneur’s problem of distribution. Sharing statistics from a Bain report, Aastha informed that six out of seven products fail (that is an 85 percent failure rate) due to poor distribution.
“Penetration is the only reliable cause of volume growth. More than 20,000 new products are launched every year, using a substantial amount of financial inputs and manpower. A Nielsen report says that distribution logistics in India hamper first-year sales of new products, as availability levels to Indian consumers are between 75–200 percent lower than in fully developed markets,” she adds.
The three co-founders soon started predicting market trends for CPG sellers and connecting them to some of their entrepreneur friends making relevant products. “We exited our company in 2017,” tells Aastha.
The three entrepreneurs started ProductX Ventures in March 2018, with the mission to solve the complex problem of efficiently sourcing, developing, and distributing innovative consumer products for institutional buyers (for reselling).
The startup started discovering, curating, and supplying innovative consumer products from India to institutional buyers from around the world, and started retailing the same in India through The New Shop. “We are creating the future of retail,” Aastha says.
The ProductX Ventures was started with the seed money of Rs 30 lakh, and the founders further took a Mudhra loan of Rs 10 lakh to start the stores. Aastha told that the company so far has sold products worth $ 10 million, and is targeting revenue Rs 20 crore for FY 2019.
“Parallelly, the one name that came to our mind for a perfect partner was the one who germinated the idea: Kevin Harrington,” Aastha says. She adds that the team wrote to him expressing their journey from when they had last met and the vision of Retail 2.0. And, it was “an instant yes”!
“We are very excited to bring in Kevin as a partner and a strategic investor, who brings his extensive experience in business, retail, and distribution. We now truly understand what Steve Jobs means by ‘joining the dots’,” Aastha says.