AuthenTech

Executive Summary

AuthenTech is an anti-counterfeit company that defends our clients’ brands against counterfeiters with best-in-class technology and quality, thus fostering universal confidence in the authenticity of our clients’ products. We do this through the use of a nanotech indicator that glows upon touch, providing immediate visual proof of a product’s legitimacy that cannot be imitated by any other stand-alone material. Through providing a technologically superior and end-user verifiable indicator to combat counterfeit goods, AuthenTech empowers our customers to recoup hundreds of millions of dollars lost to counterfeiters, and restores reputational damage.

AuthenTech has a dual product offering as either a stamp to be used on packaging or a thread to be directly incorporated into apparel products. This allows for proof of authenticity through a product’s entire life, from production through use and even potential resale, in an easily recognizable fashion. Firstly, this allows brands to recapture all revenues lost to accidental purchases of counterfeit goods. Secondly, this will deter deliberate purchases of fake goods to leech off of a brand’s status and image, as the fake goods can no longer be passed off as real. Additionally the customizability of characteristics including color, size, and physical pattern makes our anti-counterfeit indicator more versatile than any in the industry. Coupling this indicator with point-to-point supply chain security ensures our customers’ manufacturing integrity remains intact.

AuthenTech’s indicator addresses the problem of counterfeiting in the apparel industry, with a specific initial focus on the European luxury apparel market. More than $450 billion worth luxury apparel goods are counterfeited each year, with the most counterfeited brands being luxury names such as Chanel, Louis Vuitton, Prada, Hermes, Gucci and Dior (Shannon, 2017). These brands have been actively seeking a solution for many years with little success. Louis Vuiton, for example, spends $17 million a year on lawyers to litigate against counterfeiters to no avail (Fontana et al., 2019).

Market trends in the luxury apparel sector have been making current solutions obsolete while making the features of AuthenTech’s nano-tech solution more valued to the sector. These trends include the ability for solutions to be aesthetic, customizable, end-user verifiable, and non-counterfeitable.The European segment of the luxury apparel industry specifically provides favorable industry context. Europe possesses the greatest concentration of luxury brand sales, and counterfeiting in this market results in a 15-20% of revenue lost for luxury brands (Statista, 2015). In addition, authentication requirements in the EU are some of the strictest in the world, and planned future legislation has been increasing demand for end-user verifiable anti-counterfeiting technology (Avocats, 2010). Our initial target market of anti-counterfeiting for luxury apparel brands within Europe is $265 million, and we expect this to rise as new regulations take effect.

Our positioning as the only anti-counterfeiting solution that is easily end-user verifiable, unable to be replicated, and customizable in terms of physical design, fits the desired wants of our target market as proven through primary and secondary research. Existing end-user verifiable solutions in the space, including holographic stamps do not satisfy our clients’ requirements of minimal aesthetic infringement and customizability. Other solutions like RFID and track-and-trace are not end-user verifiable as scanners cost upwards of $3000. Furthermore, all of these competitors have already been counterfeited themselves, defeating their purpose.

Because of our business-to-business model, the focus of our marketing strategy will be communicating the product differentiators above directly to decision-makers within luxury brands, including the design studio and executives in charge of brand protection, as well as channel partners, such as the manufacturers for such brands. Additionally, promotion through trade shows, where luxury brands source technology for inclusion in their products, will be essential. End-user education for the brand’s customers would also need to be accomplished through partnerships with our customer brands to generate public knowledge and use of the technology.

AuthenTech’s operations plan involves executing our mission by ensuring supply chain security, quality control, and customizability for each customer, while simultaneously minimizing overhead costs. This will be achieved through minimizing R&D costs by licensing the nanotechnology from SafeStamp, a firm who has proven the innovative nanotech indicator exclusively within the pharmaceutical industry, while conducting in-house manufacturing of the product. The removal of time-intensive R&D reduces initial cost structure by 35-40% compared to competitors, and rather passes this cost to a royalty fee. Initially selling the stamp version of the indicator allows time for in-house development of the thread indicator. Expanded offerings using the thread, followed by subsequent expansion into the global apparel market, provides expanded revenue opportunities once adoption into our initial target market begins to mature and once the product has been refined.

Execution of AuthenTech’s plan will be primarily carried out by a five person management team. CEO Ronak Bhagia has prior work experience in the anti-counterfeit industry with SafeStamp, as well as experience consulting for start-ups. CFO Son Hoang brings his experience as a past startup founder, as well as expertise in polymer and nanotechnology research. CTO Sasi Ravikumar and COO Karen Dong bring experience in biotechnology manufacturing and research. CMO Natasha Dalmia provides experience in growth strategy at a startup accelerator, as well as M&A strategy knowledge in scaling & exits. The Board of Directors and Board of Advisors further supplement the team’s knowledge in areas key to AuthenTech’s operations, including financial expertise in raising capital, board of directors experience at other tech-based startups, anti-counterfeiting specific business development and legal expertise, and luxury apparel market specific consulting experience. Key hires, including a sales force and R&D team, will be made to support scaling of the firm.

AuthenTech’s technological leadership, target market strategy, and operational plan leads to a uniquely favorable financial position. In 2025, we expect $56 million in revenue, with 85.4% gross profit and 41.3% net margin as a percentage of net sales. Breakeven revenues occur in 2023. Initial sales of our stamps will average $5.63 per stamp, and our nano-particle-infused thread will average a price of $7.50 per unit. Our primary expenses to achieve this target include the salaries to our key hires in R&D, manufacturing, and sales, as well as the purchase of the polymer printing equipment for manufacturing of the stamps and thread. In addition, we will be renting our manufacturing facility in Austin, TX and warehouse storage spaces to enable low capital expenditure.

We will be seeking a total of $4 million through equity investment in two rounds, first a seed round of $1.5 million in Q2 2021 to complete our technology transfer from SafeStamp and execute our initial plant tests. Subsequently we will raise another $2.5 million in Q2 2022 to fund our thread product like R&D and expand our sales and field engineering team. We are targeting an IPO in 2026 to raise funds to expand into the non-luxury mass-market brands and also provide an exit opportunity for our early investors.

Through our defensible position and novel technology, AuthenTech will cement itself as an industry leading anti-counterfeit solution that recaptures lost revenues and restores consumer faith in counterfeited brands.