June 5, 2019

by Lynda Kiernan

China’s state-owned COFCO has announced a partnership with Chinese food tech venture capital fund Bits x Bites, reflecting COFCO’s first such agreement with a startup investor.

“COFCO Nutrition and Health Research Institute (NHRI) is the leading corporate research and innovation entity advancing food sciences in China,” said Matilda Ho,founder and managing director, Bits x Bites.

“Many of their areas of focus fall right within the investment theses at Bits x Bites, such as sustainable protein, food safety, or nutrition. As China’s first food tech venture capital fund, we have made tremendous progress fertilizing the larger food innovation ecosystem, starting with the recently announced China Food Tech Hub with corporates like Danone and PepsiCo. And now working with COFCO NHRI is another step in that direction. We are honored to be their first external food tech venture partner and to be trusted to extend their lab resources and scientific expertise to our portfolio community.”

The goal of the partnership, which was forged through COFCO NHRI (Nutrition and Health Research Institute), is to drive the development of agriculture and food tech innovation in China by making COFCO’s resources available to qualifying tech companies, while also giving the COFCO organization access to new and creative technologies.

COFCO NHRI is the R&D division that drives the development of new technologies, products, services, and food experiences for the wider COFCO Group. As China’s largest food processor, manufacturer, and trader for rice, oil, corn, sugar, and other staples, COFCO’s portfolio includes Mengniu Dairy, and Womai.com, and joint ventures with global giants such as Coca-Cola, generating $70 billion in revenue last year. Across its vast and wide-reaching operations, COFCO NHRI’s mission is to elevate health and wellness in China and to lift efficiency of agricultural and food processing.

This partnership with Bits x Bites echoes strategies carried out by many of the world’s largest CPG companies, with very similar goals.

The move to launch venture capital arms and accelerator programs or incubators has become a widely used method by some of the world’s largest and most conventional companies to achieve diversification, and to gain a foothold and to establish relevance in a swiftly changing consumer market. CPG companies also use these programs as a means to stay a step ahead of their competition while realizing the growth potential in disruptive food innovation.

In recent years there has been a flurry of accelerators and venture capital arms launched by large CPG companies including Kellogg, which launched eighteen94 in 2016; Campbell Soup, which launched Acre Venture Partners that same year; Nestle, which launched the Terra Food + AgTech Accelerator in partnership with Rabobank in 2017; Kraft Heinz which launched Evolv Ventures in 2018; General Mills which launched 301 Inc. in 2015; PepsiCo which launched PepsiCo HIVE; and Barilla, which launched Blu1877. The establishment of Seeds of Change™ is indicative that there is still an ongoing shift occurring within the food sector, and that there remains a scenario in which Big Food needs the rapid-response innovation generated by startups as much as startups need the capital available from Big Food.

The partnership is also hugely beneficial to Bits x Bites, the first food-focused VC fund in China. To date, the fund has backed both Chinese and international companies developing technologies from gene editing to cellular agriculture, smart packaging, and clean protein pet food. Through COFCO, Bits x Bites will have access to 50,000 square meters of COFCO NHRI lab space and scientific equipment across 12 R&D centers in China. It will also make available potential pilot opportunities throughout COFCO’s extensive supply chain covering 140 countries.

“Our entrepreneurs impress us all the time with their vision, execution, and persistence,” said Matilda Ho, founder and managing director, Bits x Bites. “But their journeys are littered with challenges, from the point of proof of concept, there are tremendous learnings to be had as they test their hypotheses, refine their technology to get to product-market fit and commercialization. With COFCO NHRI agreeing to lend R&D resources and pilot opportunities, we hope we can make their road to success a bit smoother and faster, whether it’s from zero to one or one to 100.”

-Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.