US-based CPG conglomerate Starday raised $9 million in a Series A round led by Equal Ventures and Slow Ventures and $2 million in debt from Silicon Valley Bank, which the company will use to expand retail distribution for its AI-generated brands, company CEO and Co-founder Chaz Flexman said.
Starday launched in 2020 with the mission to reduce the product development cycle and launch products that tap into trends before they happen, Flexman said. Currently, Starday offers crackers, hazelnut spreads, protein toppers and seasoned rice under four brands.
Starday analyzes first-party surveys, receipts, menus and other data using AI and a consumer data platform, which allows the company to identify areas of whitespace for innovation. The company also analyzes front- and back-of-pack claims to understand messaging that resonates with consumers, he added.
Starday is not afraid of expanding into multiple categories, given the speed at which it can innovate and launch products, Flexman explained. This approach is counter to the conventional wisdom of growing slowly in a specific category before expanding into other products.
“We are not just a snack food company or a core staples company. We wanted to have a really broad manufacturing network that allows us to be in any category where there is plenty of consumer demand, and we can capture that demand. It was very intentional to not just be in spreads or not just being crackers,” he elaborated.
Starday develops allergen-friendly school snacks with AI
Last month, Starday launched an allergen-friendly school-safe cracker brand at Hannaford Supermarkets stores on the East Coast and online. The recent round of funding will fuel Habeya’s expansion into Kroger stores nationwide and support the brand’s recent launch into Hannaford stores in New York, New Hampshire, Maine, Massachusetts and Vermont and Erewhon in Los Angeles.
“There is a large percentage of schools that are actually banning top allergens on campus just because they do not want the liability. And that creates a struggle for parents ,” Flexman said.
AI does not always predict the right trend or product type, Flexman explained. However, AI “whittles down” the possibilities, leading to a greater chance of market success, he explained.
Additionally, simply identifying a top trend might not be enough to win in the market, which is why Starday analyzes how various trends work together and what combination of trends and claims are most likely to attract consumer demand, he added.
“Sometimes, a top trend is not helpful. What we are trying to do is almost look at trends as networks, where some trends reinforce each other while others are more disconnected. And simply just picking a top trend is not enough if they do not naturally fit together because you risk creating a product that actually does not resonate with any one consumer group,” he elaborated.
Running software ‘faster than we can launch products’
Starday also is working with other CPG companies and retailers to use its AI to identify market opportunities, Flexman said.
“We can run the software models faster than we can launch products or put them on retail shelves,” Flexman said. “The core is always putting products on shelf, and that starts with our own brands. But if we have the ability to enable others in the industry, that is wonderful as well.”