301 Inc., CAVU Lead $18M Round for Kite Hill
May 24, 2016
California-based producer of artisanal, alternative dairy foods made from nut milk, Kite Hill, has closed on an $18 million round of fundraising led by General Mills’ venture arm, 301 Inc., and CAVU Venture Partners.
Kite Hill uses its proprietary method of almond milk production using non-GMO almonds sourced from California’s San Joaquin Valley as the base ingredient to produce their plant-based cheese, yogurts, cream cheese, and raviolis. The products are sold under the Kite Hill brand name and sold at Whole Foods markets.
“Plant-based used to be more synonymous with sacrifice than with taste,” John Haugen, vice president and general manager of 301 INC, General Mills’ venture capital arm told the New York Times. “Now, companies like Kite Hill are able to deliver plant-based products that taste good.”
This is the fifth investment for 301 Inc. since its launch last fall, and the second venture capital investment that 301 Inc. and CAVU have partnered on this year according to Food Dive. The firms jointly led a $2.1 million investment round for Irvine, California-based organic cottage cheese startup, Good Culture, earlier this spring.
Consumers are increasingly seeking out products with minimal ingredient lists, that have been humanely raised without antibiotics, are gluten-free and grass-fed, and have a high level of sustainability, among other criteria, and large food companies are finding it challenging to internally develop new product lines that fit within these parameters in a timely and cost effective manner.
“Big food companies have many assets and advantages, but developing in-house brands that consumers will perceive as healthier and authentic has been a problem for them — they’re just not designed to do that,” Victor Friedberg, managing partner at S2G Ventures told the New York Times, adding that an internally developed company would need to generate approximately $100 million in its first year to offset the cost of development.
Instead, large food groups such as General Mills have been launching venture capital arms to acquire or to invest in innovative food startups with high growth potential. Campbell launched Acre Venture Partners, Hain Celestial recently announced the formation of Cultivate Ventures, and Anheuser-Busch InBev announced it was partnering with Techstars to create their accelerator, Techstars Connection.
Indeed, plant-based food producers such as Kite Hill have been a segment of particular interest for such funds, according to Food Dive, which notes, “Plant-based foods, particularly dairy, are a sweeping industry trend with both cost and health implications that could upturn long-dominant categories.”
In light of this swell of market potential, Kite Hill plans to use this new funding to support its efforts to increase consumer awareness for its brand and products, and to expand its distribution network.
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