Your $50 Billion Toy Box

By Matthew Milner, on Wednesday, December 13, 2017

Toys are big business:

In the U.S. alone, families spend $50 billion a year on them.

Unfortunately, more than half of those toys are duds:

Kids either get bored with them quickly, or don’t like them at all — which means billions of dollars of toys end up gathering dust and cluttering up our homes.

But now a new start-up has created a solution to this challenge.

And not only could it bring joy to the kids in your life this holiday season…

But it could put some serious holiday cheer in your pocket.

Kids Get Bored Easily

Most kids get bored with their toys quickly.

Given how fast their brains are developing, this shouldn’t come as a surprise:

85% of our brain develops by the time we’re five-years-old.

This means kids’ interests will constantly be changing — and it means that the toys that interest them will be constantly changing, too.

For parents, grandparents, and holiday gift givers, this creates a challenge:

How can you find toys that kids will like? 

Introducing Green Piñata

A new start-up from Massachusetts has created a solution to this challenge:

It’s a subscription-based service for toys called Green Piñata.

Simply put, for $25 a month, the company sends your kid a monthly box of four new toys.

Keep the ones your kid likes, and send the others back.

Kids seem to love this idea — and so do parents:

The company has shipped over 2,000 boxes so far, and is currently experiencing 60% month-over-month growth. 

Toys Chosen by Experts

The company is initially focusing on the market for kids up to age five.

With 85% of brain development taking place in a kid’s first five years, it’s critical that they play with toys that help foster learning.

That’s why the company’s toys are hand-selected by educational experts.

In particular, the company focuses on premium, colorful toys like these:

greenpinata

And to ensure that kids get more of what they like, and less of what they don’t like, the company has built a “recommendation engine”:

Over time, as kids keep certain toys and send back others, this software-based technology gathers data about each customer’s preferences, and then uses this data to personally tailor each box.

The Opportunity

Now Green Piñata is raising about $100,000 so it can scale up its business.

The minimum investment is just $25, and all investors are welcome to take part.

Let’s take a quick look at some of the pros and cons of an investment:

On the “pro” side:

Strong Team — The team includes a Harvard PhD in Education as its Scientific Expert. And its Chief Marketing Officer has experience marketing to young parents from her time at Care.com and Fatherly.

Huge Market — The market for toys is $50 billion a year. With the company’s initial focus on children up to age five, the market is about $5 billion. The company is estimating that it can capture at least $50 million of this market in the next 5 years.

Clear Expansion Plans — In addition to its subscription boxes, Green Piñata has a plan to start earning revenue by doing promotions for its various sales partners, and by offering gifts for newborns and special occasions.

On the “con” side:

Competition — Now that the company has proven the validity of its business model, it faces competition from a number of enterprises (potentially including Amazon.com) that have far greater resources.

Supply — The company doesn’t manufacture its own toys. Instead, it relies on third parties to meet its contractual obligations with its customers. If its suppliers don’t deliver, the company could be adversely affected.

Capital Constraints — The company is raising just a small amount of capital in this funding round. It’s unlikely that it’s enough to help the company reach breakeven or profitability. While it may seek to increase the amount it’s raising, and may aim to raise additional capital in the future, there are no guarantees it will succeed.

But if these risks don’t scare you off — and if you understand how hard it can be to find the right toys for kids — why not dig a little deeper?

Remember: investing in start-ups is risky, so you need to do your research!

For more information about Green Piñata, click here »

Happy Investing

Please note: Crowdability has no relationship with Green Piñata, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Matthew Milner

Founder
Crowdability.com

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