One B2B tech company is tackling a big inefficiency in the CPG food and beverage industry: connecting brands with manufacturers who have the capabilities and line times to produce new products.
Officially released today, Keychain (both the company and core product name) aims to bring transparency and simplicity to the CPG landscape by streamlining the matchmaking process of brands and retailers searching for compatible manufacturers while also unlocking untapped capacity.
Backed by a $18 million seed round led by Lightspeed Venture Partners, former Angi executives Oisin Hanrahan and Umang Dua launched the artificial intelligence-fueled platform to address an increasingly complex CPG landscape, one where private-label brands competing for line times and a rise in omnichannel shopping and a complicated landscape of dietary restrictions has created obstacles to getting new products to market.
“There’s this need to build an ecosystem to fill that gap between the people who brand our products and the people who actually manufacture them,” Keychain co-founder and CEO Hanrahan said.
Approaching the problem in a way that resembles how Hanrahan and Dua founded the home service platform Handy (which would later get incorporated into Angi) and using the institutional knowledge of their third co-founder, former Monogram Capital investor Jordan Weitz, Keychain allows brands to search for manufacturers using thousands of specific processes and capabilities to speed up the time and resources often used finding the right production partner.
Not only will building the database address inefficiencies in how retailers, brands and manufacturers interact, but the idea is to have cost savings trickle down to shoppers.
“We think that if we can bring some transparency to this manufacturing world, we can help consumers have higher quality products at a lower price,” Hanrahan said.
How Does It Work?
Keychain’s database uses AI to catalog and tag products by their manufacturing processes, refining search parameters and giving brands more specified options for finding the right production partner. The platform allows brands and retailers to reserve available manufacturing line time and pricing from over 10,000 co-packers and branded manufacturers.
So far, the company claims to have unlocked over $100 million of exclusive manufacturing capacity across over 40 product categories.
Keychain is currently offering two main products. The base level product is a “search and discovery” database built using primarily publicly available information. Approved brands, retailers and manufacturers can post and connect for free. For an annual subscription fee, there is also a premium profile option with enhanced features.
Keychain isn’t operating in a vacuum. There are other B2B contract manufacturing databases which categorize and list co-mans. A broader criticism of these types of databases is that they are sometimes slow to update and can be time-consuming to search and match with – something that Keychain believes it can reduce through its unique approach to matching.
Another tech platform taking a similar approach is PartnerSlate, which also uses generative AI to match brands and co-mans. PartnerSlate raised $4 million last year to help scale its digital tool to both established companies and emerging brands.
But Keychain is also aiming up the value chain, rather than targeting startup brands searching for co-packers on small order volumes. Currently, the core product is only available to invited partners but the company expects to open it up to a wider market of select retailers and brands in 2024.
Keychain’s core product features a transactional platform called Crossroad that is geared toward bringing untapped revenue to large-scale branded manufacturers who have unused capacity.
“If you’re a co-man and this is your business, we’re not going to be better at selling your line time than you are,” Hanrahan said. “[But] If you’re a manufacturer who runs a brand and you just have capacity you’re not able to sell; in that case, we’ll put you on Crossroad and we’ll sell the line time for you.”
The company is going to some of the biggest CPG manufacturers in the world and offering to sell their capacity anonymously to other brands or private label-seeking retailers, Hanrahan said.
“In some cases, these are billion-dollar-plus brands that own their manufacturing capabilities but have never made anyone else’s product on their line,” he said. “They don’t have a [co-manufacturing] sales team. They don’t have anything to do the work of being a co-man, except the manufacturing capability.”
In this model, these branded manufacturers pay a revenue share to Keychain when they sell manufacturing line time to other companies. The revenue share is for the duration of the contract with the brand, which is typically three years, Hanrahan said.
What this does is level the playing field for brands who don’t own their own means of production while also offering a new revenue stream for manufacturers who have excess capacity.
Aura Bora’s founder Paul Voge was at first skeptical that the platform could track hundreds of facilities’ capabilities and pricing levels across categories in a transparent way. Since then his sparkling water company has used Keychain to efficiently find new manufacturers to meet the brand’s growing demand.
“This is an amazing accelerant to taking market share,” Vogue said. “It gives the emerging brand the same manufacturing capabilities, scale and hopefully a closer price point as some of the legacy players. I wish Keychain existed 5 years ago when we were starting Aura Bora.”