At our November 9 Chicagoland Food & Beverage Network Innovation Breakfast, 90+ industry attendees learned about this new tool: ‘corporate venturing’. Companies like Tyson Foods and The Kellogg Company started their own funds to explore innovation externally. This creates an opportunity for food and beverage start-ups to bring their innovation and work directly with large food and beverage companies.
Many in the audience wondered, why would these large companies invest in outside companies? The Tyson and Kellogg panelists told us that food disruption will continue and that sometimes larger corporations like theirs cannot see food trends as quickly as smaller companies. That’s why these funds were created.
“For example, it’s a fact that we need 60-70% more protein to feed the world by 2050. That’s why we just made a deal with Beyond Meat, an alternative animal protein,” says Tyson Ventures’ Justin Whitmore. Tyson launched its $150M venture fund in April 2017. “We will have more deals by this time next year, ones that fit our mission to grow our focus areas of sustainability, less food waste, and the internet of foods.”
And for both companies, it’s not just about the money they can bring to the table. “We want to know what Kellogg can bring to the party. Does the startup just need funding? Or are they seeking product experts, marketing, or procurement experts,” said Simon Burton from The Kellogg Company’s venture fund, Eighteen94. “We want to help these start-ups unleash all of their talent by using our talent.” Kellogg’s fund is 18-months old and is worth $100M, Simon adds, “For now it’s $100M. We may increase the amount. It’s all so new.”
Also on the panel, Michael Schopin. A partner at Zenfinity Capital, he works with food start ups. Being from Chicago he’s seen a lot of change in our region’s food & beverage landscape. “In Chicago we have a lot of early businesses that need seed money. And on the flip side we have a lot of huge companies. We have very few $10M-$50M food and beverage companies here.” Schopin adds, “My fund seeks out wise entrepreneurs with a good work ethic, specifically one that wants to grow their $10M company into a $50M company.”
The event’s hour-long discussion also touched on how research and development helps these teams find new ventures to invest in, as well as the power of networking early.
All three did agree that every startup needs to go with the best partner, not the most money. “What are you looking for in a partner? Is your new partner as excited as you are about your product? Having these internal conversations is key,” adds Whitmore.