Smartivity – The Leading STEM Toys’ Player of India

Smartivity Labs, founded in 2015, is India’s leading educational startup dedicated to delivering play-filled STEM (Science, Technology, Engineering, and Maths) learning through tech-enabled toys and activities. With the aim of imparting learning using traditional and innovative ways, the founders Tushar Amin and Ashwini Kumar have established themselves as pioneers of augmented reality activities for children between the ages of 3 to 14 years.

About Smartivity

At present, Smartivity boasts of all large formats and online stores in India and also has a tie-up with leading international retail store Hamleys. Smartivity has also expanded its horizons in the USA, Australia, Spain, Portugal and other developed nations. Early this year, the Edu-tech start-up represented the country at the Fall Toy Fair, the largest educational toys fair in Dallas, USA and it has also partnered with PlaSmart Inc. and Irving Toys, two of the largest distributors and manufacturers of niche toys based out of Canada.

Smartivity products are bifurcated across 4 different categories:

1. Physical products and products that are a bridge between physical and digital toys.
2. Augmented reality related activities
3. Robotics
4. Internet of toys

The company is proud to have dynamic and highly experienced co-founders. Tushar Amin has a rich and extensive editorial experience of over 2 decades and has worked with leading editorial ventures including GQ Magazine and Filmfare. At Smartivity, he heads the Marketing, Strategy, Product Development, and Creative Operations. Ashwini Kumar, another co-founder, has gained a degree in Engineering from one of the country’s most reputed institutes and currently heads the Indian and International Business Development efforts at Smartivity Labs. Recently, our team at Business Alligators got a chance to interview the founders of Smartivity Labs, Mr. Tushar Amin. Let us take a look into some of the excerpts from the interview:

Que- What brings you into the toy industry while everyone else is in the different field?

Tushar- I was consulting for a brand that was a digital platform focused on kids that were co-owned by Mr. Amitabh Bachchan. During my stint there, I realized that there was a lack of toys that inculcates physical activities in kids. That is where I and three other friends came up with an idea of designing toys for kids that impart practical learning using DIY objects.

Que- What was the vision when you started and how it got changed over the period of time?

Tushar- Our initial idea was to design something for kids to keep them engaged and that has evolved over time. Today, our mission has transformed into imparting smarter learning in kids. Smart learning is a much broader concept based on the philosophy of Professor Mr. Robert Stanberg. For the longest time, there has been a huge focus on analytical learning. We have worked on three bits of intelligence: analytical, creative and practical. In India, there is ample amount of theoretical learning that is imparted to kids but the practical way of learning has still not become a part of the entire culture. Today, we are proud to introduce this concept and create toys with such a strong vision.

Que- What are the total number of products sold and total sales till now? Also, what is your annual Revenue?

Tushar- Over the past 2.5 years, we have sold nearly 3 lakh 50 thousand units. We are exporting our core category of STEM products to countries like USA, Europe, Middle East, and South Asia. We closed our annual revenue last year at 4.2 crores and this year, we are on track to close the deal at Rs. 10.5 crores.

Que- How do you understand the needs of small kids as they can’t speak and let you know? How do you research for your STEM Toys?

Tushar- We don’t cater to kids below the age of 3 years. Kids of every age are imbibed with specific learning that we adhere to. So, there are 3 stages of doing that:

1. Look at the concepts that are prescribed for a particular age.
2. Create games and toys around that particular concept.
3. Lastly, we test our products with three groups of people; kids, parents and teachers/psychologists.

We make toys that kids love and parents trust. And make products that are a blend of both. Every toy that we make is first tested among kids and then launched into the market.

Que- How do you validate your idea and also your upcoming product?

Tushar- We validated our idea with people we already knew. And then we evolved with whatever we had learned. The entire concept is such that we have to take into consideration what stage the child is at. We have tie-ups with schools where we go every week and test our products every time with kids and teachers.

Initially, for 6 months, we relied on paper, cloth and cardboard made toys. As far as our business model was concerned, we could either do it in the form of a subscription box or by approaching big retailers. We approached various toy stores to allow us to promote our product. We got an overwhelming response but we also got suggestions from the parents to create toys that are more durable, sturdy and they also enhance the look and feel of their home. One of our friends had a rich family background in the toy industry that helped us in getting in touch with toy manufacturers in China.

After several rounds of brainstorming, we decided to create toys which could translate into moving parts. After 8 months, we started to work on the new designs and after experimenting with several materials, we zeroed down on toys made of wood. Finally, we repositioned our brand with DIY toys made of wood that are not restricted to being board games that allow kids to play after they have constructed them on their own. We then redesigned our boxes as per world-class standards that were a smart activity for kids that inculcated learning in a more practical way. This gave rise to ‘Smartivity’. Since then, our aim is to give a real-life experience to kids on various fundamental classroom concepts they learn at school through play. We made them more appealing by painting them and printing formulae to foster quick learning among kids.

Que- Which cities are you targeting, Tier-1, Tier-2 or Tier-3?

Tushar- In terms of brand building, our focus is primarily on Tier-I and Tier-II cities, and for the International markets. We are the pioneer in making STEM products all over the world. We are also launching a range that is specific to mass market consumption, called the Impact Stream where underprivileged kids and schools with poor infrastructure will be targeted and products will be sold at a very nominal price to them, under the initiative called the ‘Smartivity Light’.

Que- How did you meet your investors? What has been the total funding raised till now? Any plans for future funding?

Tushar- So, the first set of investment was made by myself and a friend, Ashish Gupta over a period of one and a half years where we put together Rs. 35 lakh of our own money into this business. Then, one fine day, we are called to host a kid’s birthday party at Mr. Himanshu Gupta’s place (who is the CEO of S. Chand Publications) where we displayed our products and got a huge positive response. He was impressed with our products and decided to invest Rs. 75 lakh in our company. This was our first round of investment. With this money, we were able to hire a sales team across the country and expand our operations.

Then, in 2016, we entered into our second round of investment where S. Chand Publications reinvested to retain their stake in the company. We also approached leading investment companies across the globe including Advantage Capitalist, CFC Offshore in Singapore and one in Silicon Valley and together we were able to raise US $1 million. Also, there is a lot of inbound interest that we are receiving and we are planning to raise more funds in the next 5 years.

Que- How has your life changed before and after funding?

Tushar- Before funding, the pressure is to find money and after funding, the pressure is to spend every penny wisely. So the key is to juggle between various activities. Also, since most startups are in the digital field, for them actual profit doesn’t matter. They have the required bandwidth to spend money on marketing and branding activities. In our case, most of our money goes in production itself.

Que- How do you hire creative people, as your industry is completely dependent on creativity?

Tushar- We have been very fortunate because of our engineering background. Also, our first round of employees has been graduated from NIFT and various reputed art colleges in the country. So we have an internship program where we pick interns from these colleges and after going through a strict design test, selected individuals are welcomed onboard to work with us.

Que- Do you manufacture your toys in-house?

Tushar- We have a hybrid model. Because our designs are patented, we cannot outsource our manufacturing. We have a factory in Manesar where we manage the design front, packaging and quality check of all our products. Machines are run by contractors. Our operations began in South. Delhi/NCR is our leading market, followed by Bangalore and Mumbai.

Que- How is China hitting your market in India and in other countries?

Tushar- There hasn’t much impact on our business from China. This is due to 3 main reasons.

Firstly, the recent regulations and the new GST rules have affected the whole unorganized Chinese import market. Secondly, India, particularly Pune, is being seen as the future manufacturing hub of the world for toys which is giving a good competition to cheap toys due to its bulk production. Thirdly, from September 1, Government has asked for various safety regulations to be put in place for kids toys that we need to adhere to before exporting our products. These regulations are difficult for the Chinese market to adhere to, which works to our advantage. So, due to these 3 main factors, our business has luckily not been affected by Chinese market much.

Besides China has been able to replicate plastic toys that are made in a single mold which is not the case with our products. Our products are of wood and very difficult to produce so Chinese products are not our major competitor anywhere in the world.

Que- The toy market is massive but still few toy companies like ToysRUs are struggling, how do you look at them in your coming years?

ToysRUs is basically a shop chain that only sells toys and not manufactures themselves. Recently the toy market is undergoing a major change as most of the sales are happening online, affecting the retail format in a big way. For us, it has become challenging as ToysRUs was one of our prospective buyers. So, our focus has shifted to the digital front now with Amazon being our biggest online selling partner. We are also targeting global retail stores like Costco, Target and Walmart and Hamleys in India.

Que- Where do you see yourself in next 2-5 Years?

Tushar- We are targeting a 100 crore revenue by the end of 2020 thereby establishing ourselves as the number one STEM toy manufacturing brand in the world.

Que- 1Any advice for budding entrepreneurs of toy industry?

Tushar- I am in a learning phase myself. But the key is to learn and adapt to new things and stay focused so that your products deliver the right values in order to make big difference in the lives of your customers.