Turing Labs lands $16.5M to bring AI to product formulation
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The consumer packaged goods (CPG) industry has struggled to grow over the past decade. That’s partly because companies have tended not to economize when it comes to R&D spending. For example, producers of home and personal care goods surveyed by Accenture in 2014 on average invested 2.3% of their total revenue in R&D. Yet according to IRI, most new CPG products fail to capture more than $10 million in sales in their first year.
The declining cost of computing, however, promises to improve product design, prototyping, and testing — particularly with the explosive growth of cloud computing. These trends have catalyzed the launch of startups like Turing Labs, which are applying AI to assist CGP companies with product design and formulation. Investors believe in their potential — Turing today announced that it raised $16.5 million in venture capital, bringing its total raised to over $18.25 million.
Product formulation deals with understanding how materials interact to provide properties, processing, and delivery of active ingredients in a useable form. Formulation is a key area of product development, helping to determine the patentability and lifecycle of products ranging from perfume and sunscreen to processed, frozen foods.
Turing aims to streamline the formulation process by using companies’ data to build a knowledge base and then leveraging AI to create visualizations that show how formulations compare to benchmark products. Customers can use data from existing product ingredients and factor in aspects like the package’s impact on product stability.
“Sharing data is hard, and the role of a product developer doesn’t scale, and it is hard to truly innovate on ingredients, formulations, and new product categories when it is such a manual process. With Turing, we set the stage for the next generation of product innovation, by AI that continuously learns and recommends prototypes optimized for a wide range of goals,” CEO Manmit Shrimali, who cofounded Turing with Ajith Govind in 2019, told VentureBeat via email. “The C-suite and management structure cares about time-to-market above all. Because we dramatically shorten the product development lifecycle, they are [often] happy with the results.”
Above: Turing Labs’ web-based dashboard.
Turing’s platform can support food, cosmetic, personal care, and cleaning products among others, according to Shrimali. The startup is already working with “top 15 global CPGs” and its platform has been used to formulate plant-based foods, beverages, personal care items like shampoos and cosmetics, and laundry detergents, Shrimali claims.
“To address health and wellness trends, supply chain constraints, to ongoing pressure to improve margins … companies are wasting huge amounts of money and resources and money on [an] antiquated manual [formulation] processes. The issue is not what to build, but how to develop that deliver unparalleled returns in the market — that’s exactly the problem we are solving,” Shrimali said. “Our growth has been explosive: zero churn, 400%-plus net recurring revenue. [W]e are becoming the default platform for product development. All of our customers have come back with bigger orders and more ambitious projects as soon as they’ve seen what the product can do.”
The value of AI
CPG companies stand to gain from investing in AI not only for product development, but across their organizations. A 2018 Boston Consulting Group (BCG) survey found that AI-driven demand forecasting, personalized customer experiences, and innovation cycles can boost CPG companies’ revenue by 10%.
According to a recent PricewaterhouseCoopers survey, 83% of retailers and CPGs said that AI would become a “mainstream technology” in their companies in 2021. Nearly half of retail and CPG respondents say that the pandemic accelerated their initiatives.
For example, PepsiCo is using AI to collect data on potential product categories, allowing R&D teams to glean the types of insights customers don’t report in focus groups. The company also taps AI to analyze how those data-driven decisions ultimately played out, PepsiCo executives told VentureBeat.
Despite the promise, some CPG companies remain skeptical about AI’s feasibility and impact. While those in consumer electronics, food, and nutrition are at the forefront of AI adoption, the cosmetics and luxury industries remain further behind.
BCG blames the gap on the “decentralized and matrixed” nature of many CPG organizations. Though often pros at branding — with first-rate marketing, advertising, and product innovation capabilities — CPGs are typically less advanced in implementing large-scale analytics or technology transformation programs, a 2020 BCG analysis concludes. “[Their corporate] structure has led to marketing and product development prowess, but it can hinder [their] ability to invest in data and analytics platforms or to build the agile ways of working necessary to scale them,” the analysis reads.
In a 2019 report, analysts at Bain write that, as in other sectors, CPG companies must stop thinking about AI as “projects” and embrace the technology as a way of doing business.
“[W]e make accurate predictions about new potential formulations before they are made. This reduces the need for costly and time-consuming physical synthesis and testing,” Shrimali added. “[In product formulation,] every ingredient has an effect on every other ingredient. A seemingly innocent ingredient going out of stock triggers a full reformulation process. This is where our AI can help; it can recommend replacement ingredients, but also offer suggestions on what else needs to change about the ‘recipe’ … of the product.”
Shrimali says that the latest investment in Turing — a series A — will be used to support R&D, grow the engineering and operations teams (the company plans to increase headcount by 300% by 2023), and a further build a go-to-market organization. Insight Partners led the round with participation from Moment Ventures, Y Combinator, and Medallia CEO Borge Hald.
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