WATCH: Through the Eyes of the Investor: how Chennai startup Karomi is saving enterprises millions of dollars by tracking label artwork and design
How does an investor make an investment decision? What guides this decision? What prompts them to rally behind an idea, an entrepreneur, and a certain product with their support, and, more importantly, with their money? And once they do, why do they choose to stay the course?
All of this and more answered in YourStory's brand new video series, Through the Eyes of the Investor.
Gone are the days when packaging and labelling were an afterthought. More so in the consumer goods industry, where there’s an influx of market stimuli and an increasing trend of impulsive consumer behaviour – an estimated 70 percent of purchase decisions are now believed to be made right at the shelf.
From design to colour and even information on ingredients, minute details come into play while favourably influencing the consumer behaviour. No wonder then that globally the packaging and labelling market is skyrocketing with market projections predicting growth at a CAGR of 16 percent between 2016 and 2022.
While the space is ripe with opportunities – even ready for a disruptive business breakthrough – it’s in urgent need of a streamlined process. A technology tool that can take care of end-to-end management of the lifecycle of artwork, right from design to printing and finally the packaging stage.
In the fourth edition of Through the Eyes of the Investor, Ideaspring Capital’s Founder and Managing Director Naganand Doraswamy shines the spotlight on one such tech startup that has forged a niche business for itself in this process-intensive industry: Chennai-based Karomi.
Watch the fourth episode of Through the Eyes of the Investor, hosted by IdeaSpring Capital’s Naganand Doraswamy.
In this episode, Doraswamy takes us behind the scenes at Karomi and how it’s helping enterprises save millions of dollars by tracking label artwork and design, an estimated $10 billion business in India.
End-to-end packaging and labelling management
“All enterprises [especially enterprises dealing in consumer goods] need to ship products, and with shipping comes packaging and labelling. Today there is no tool or product to address the packaging and labelling issue end to end,” explains Doraswamy, spotlighting the fundamental challenges ailing the FMCG industry.
Globally, one of the biggest markets – and the fourth largest in the Indian economy as per an IBEF report – the FMCG industry, interestingly, spends at least 10 percent of its product cost on packaging and labelling. This takes the artwork and labelling industry to an estimated $10 billion in the country.
In a market size of this magnitude, a fragmented structure could mean unprecedented operations costs, which in turn could cost enterprises millions of dollars in write-offs.
Enter Karomi, a Chennai-based startup whose packaging technology solutions cuts the confusion with a single dashboard where everyone knows what is happening with artwork or labelling. Simply put, it’s a SaaS company with a significant focus across two principal industries - Life Sciences and CPG (Food & Cosmetics) – and that allows its clients to track their labelling art.
Interestingly, Karomi was originally launched as a document management and workflow automation company in 2003. The brain behind the startup, Vilva Natarajan, who holds a double master’s in computer engineering and computer science from the Louisiana State University, realised the need to pivot, and thus the venture went from a commoditised IT business to a value add.
But why track packaging artwork? How does it benefit enterprises?
Consider this as an example. A typical consumer goods company will have multiple layers between production and packaging, with each department having a say in the ultimate look and feel of the artwork. The process would most likely start with designers creating the label as per the specifications of the manufacturing team, and then passing through the marketing team to be sent to preferred vendors.
At each stage, this time-intensive process requires human intervention to check and verify the changes. And even with manual intervention, chances are that there’s a mismatch between the expectation and the final output.
Karomi’s cloud-based product aims to eliminate these lags, automating the whole process while crunching the time between production and market launch. I’s flagship product, Manage Artworks, launched in 2015, helps regulated industries like pharmaceuticals and CPG to ensure regulatory compliance of their pack labels.
“By doing this, Karomi is crunching the time required for packaging and labelling by more than 80 percent, thereby are saving billions of dollars for these enterprises,” Doraswamy says.
Building a scalable global company
Karomi’s packaging artwork management software has a proven track record for helping global and popular Indian brands – from Godrej and Bajaj Corp Ltd to Exide and ITC Limited – achieve brand and regulatory compliance and speed up time-to-market with error-free compliant artworks.
No surprises then that the team’s relentless endeavours have made venture capitalists take notice of them. In 2017, the company raised a seed investment of Rs 3.5 crore from Ideaspring Capital. The investment, incidentally, came as Karomi was looking to expand its business to the US.
“We decided to partner with Vilva and invest in Karomi to build a scalable global company addressing this niche market of artwork and packaging,” Doraswamy says. He is quick to point out, however, that to build a scalable product company, it has to have a global market.
Growth for Karomi, the tech investor reasserts, will come from markets where regulatory compliance and enforcement is very high. These are typically western markets, including the US and Europe.
“Both US and other western markets, where the enforcement is very high, are the ideal market for us,” he says.
“We already have significant investments in the sales team in the US and are really hoping that in the next year or two, the sales team will kick into high efficiency and convert a lot of existing customers,” Doraswamy says.
Concept: Tenzin Pema
Director: Aditya Gowtham
Camera: Rukmangada Raja
Editor: Shlok Bhatt
Writer: Sutrishna Ghosh
Content Editor: Teja Lele Desai