Over the past few years, the demand for contactless payments and other digital payment methods in India has increased dramatically. While digital adoption has its benefits, it has also attracted fraudsters who put consumers at risk by purchasing counterfeit products, many of which are difficult to spot.
The expected annual loss from counterfeiting in India across all sectors including FMCG, banknotes, pharmaceuticals, alcohol and automobiles is estimated at around Rs 1 lakh crore, according to the report of the Association of Authentication Solution Providers.
Recent developments in computer vision and machine learning have also made it easier to copy product packaging designs, which requires anti-counterfeiting solutions. However, many of them require a huge process change requiring additional capex investments.
“The market is flooded with sticker-based solutions that lack transparency and reliability. To combat counterfeiting issues, companies across all verticals need to use cutting-edge technology that provides trust, transparency and integrity to their stakeholders,” says Padmakumar Nair, CEO and Co-Founder, in a conversation with Your story.
To combat counterfeiting issues, classmates Padmakumar Nair and Shalini Nair created a SaaS startup Ennoventure Inc, that solves brand authentication and engagement across industries including FMCG, Pharmaceuticals, Agrochemicals and Luxury Goods.
Founded in 2018, Ennoventure solves counterfeit problems with a non-disruptive solution to verify the authenticity of products, without having to change the customer’s existing packaging design and printing process.
“Our anti-counterfeiting solution adds an invisible cryptographic signature to packaging and leverages AI and cryptography to provide authentication and a connected packaging experience through smartphones,” he adds.
At MIT, Padmakumar learned that every two minutes a child in Africa dies of malaria – a fully curable disease – solely from counterfeit malaria drugs. This served as a trigger for him to think about anti-counterfeiting solutions.
In early 2017, Shalini was running a product-based startup working on business intelligence and analytics when Padmakumar, her bandmate from Rajiv Gandhi Institute of Technology, Kottayam, approached her to found Ennoventure. As of August 2018, she had filed two patent applications in the United States, one having been accepted in November of the same year and the other in February 2019.
The founders designed Ennoventure’s solution to focus specifically on protecting brand authenticity by securing companies’ packaging and designs, which can be easily traced by everyone in the distribution chain.
Based in Cambridge, Massachusetts in the United States, with an R&D center in Bengaluru, Ennoventure has a team of 69 employees in the areas of products, operations, sales and marketing, and human resources.
While Padmakumar is responsible for the startup’s growth strategy and organizational vision, Shalini leads innovation and strategy.
How it works?
The company’s SaaS product is to offer a portal for brands—Encryptand a microsite and Vyu App for the end consumer. Although available for Android and iOS phones, the free app is login-protected and limited to customer use.
It allows brands to upload their artwork to the portal and then download and print the artwork encrypted. Once their products are available on the market, the end consumer can upload a photo of the product to the microsite, which certifies that it is genuine or fake. The startup has certifications for quality management systems and information security management from the International Organization for Standardization (ISO).
Padmakumar says, “Our product, Enncrypto, is designed with our customers’ design, printing and packaging processes in mind. We didn’t want to upset them, so we built this software that can verify the authenticity of their products without modifying or adding any steps to the process.
“We use AI and cryptography to add invisible cryptographic code to the packaging that counterfeiters could not access. We also use many ML models that can detect suspicious activity. For example, a deep neural network spots potential counterfeit products and reports them, while the blockchain stores the “electronic pedigree” of the product, as soon as it is manufactured.
Founder and CTO Shalini adds: “Running on a SaaS model, Enncrypto is agile and discreet. While other tracking solutions might be too obvious, Enncrypto is more reliable because it is not detectable.
“This solution is very cost effective and its agility allows it to be deployed in less than 48 hours on multiple packaging designs. Everyone in the distribution chain, from the manufacturer to the logistics support, can see the product and verify its authenticity, including the end consumer. Our technology is also educational because it contains information about the product itself, such as composition, date of manufacture, side effects, etc. “, she adds.
Economic model and traction
Ennoventure operates primarily on a B2B model, working with Brand Managers and Product Managers who wish to ensure the authenticity of their designs or packaging. While these tie-ups are its sole source of revenue, the startup has not disclosed details of its earnings.
“We are also targeting packaging managers because they are the ones who care about authenticity and the brand for engagement. We combine the two (brand authentication and engagement) to deliver real experiences,” adds Padmakumar.
Currently, the startup works with five undisclosed brands across all industries.
Funding and way forward
In April 2018, Ennoventure raised $500,000 in a seed funding round, followed by a $5m Series A round in 2021 from Fenice Investment Group, USA. He also raised $500,000 through a bridge between the two.
On the startup’s future plans, Padmakumar says,
“We are constantly expanding our product range and geographic area covered. We focus on item-level fingerprinting as well as extending to encryption products. A key area for our R&D and technology teams is sustainability and recycling, and we already have solutions that address reducing the carbon footprint.
Ennoventure’s recycling solutions include the use of electronic leaflets instead of paper instruction booklets.
Currently it operates through the Regions United States, Europe, India, Africa and Middle Eastwith expansion plans in the Asia-Pacific and Africa.
According to a new McKinsey Global Institute Analysisthe counterfeiting of a dozen technologies, ranging from mobile internet to cloud computing and advanced genomics, could have a combined economic impact of $550 billion to $1 trillion per year by 2025. Studies International organizations indicate that the global anti-counterfeiting market is between 150 and 200 billion in size.
The startup is in competition with players like Alp Vision and Avery Dennison.