General Mills Launching Venture Capital Arm for Food Startups
October 23, 2015
Food giant, General Mills, is launching a venture capital arm to fund food startups. The strategy for the new unit, called 301 Inc., to take stakes in food startups was finalized about three months ago.
The unit will provide capital and take stakes in regional startups that are in need of capital to fund growth. General Mills will not disclose if 301 Inc. has made any investments to date, but, two years ago General Mills took a minority stake in plant-based food company, Beyond Meat. Over the past two years, General Mills has assisted Beyond Meat with challenges it has faced regarding its supply chain, and is currently working on new products that are scheduled to reach the market in early 2016.
The establishment of the new investment arm is a testament by General Mills, the maker of Cheerios and Lucky Charms among other popular foods, that there is a shift occurring within the food sector that is creating 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.
General Mills’ net sales fell by 2% to $17.6 billion in 2014 as consumers are buying more fresh and organic produce and opting for more transparent ingredient lists and farm-to-table operations that small specialty brands can offer.
Originally, 301 Inc. was created three years ago as a way to internally develop small brands, however, within the past few months, General Mills shifted its focus to invest in early stage startups that are still small enough to react quickly to changes in consumer demands.
301 Inc. will invest within three guiding parameters. The first is to ensure that its investment supports an opportunity to compete in a new food category. The second, is that some of its investments will be structured in a way that will allow General Mills to acquire the startup at a future date, and the third, is that General Mills will have financial goals set for each investment.
“You want to build the case that you can be the indispensable partner for that entrepreneur to help them build and scale their vision for the future,” says John Haugen, vice president and general manager of 301 Inc.
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