Unilever Ventures’ (UV) exit from market research agency Brainjuicer in April is indicative of the eponymous Anglo- Dutch consumer goods maker’s corporate venturing unit’s focus on selling rather than investing as it reaches its first decade of operation.
Speaking to a gathering of portfolio companies and partners in London, John Coombs, managing director of UV, which was founded in 2002 as the European direct corporate venturing unit of Unilever, said: "Given that we made 15 times our investment in Brainjuicer, my only regret is we did not invest more." Brainjuicer’s share price has increased 30% since the exit.
Although UV is rebalancing its portfolio of 15 companies by looking to exit several in which they have been invested for five to seven years, Coombs showcased portfolio businesses he said validated UV’s corporate venturing strategy.
Froosh, a fruit "smoothies" business in Scandinavia, was allegedly in difficulties when UV bought a majority share in 2008. Now, under the leadership of chief executive and soft-drinks industry veteran Brendan Harris, Froosh is described by the company as the market leader in the Nordic region and has ambitions to expand into other European countries, starting with Germany. Market share has increased to over 35% despite a 38% price increase in smoothies over the past three years.
The Froosh products are claimed to be the only longlife – six to nine months – smoothie not made from concentrate.
Harris said: "The only reason smoothies do not keep is because there are bacteria in the packaging. But we use a glass bottling process which kills the germs, massively cutting down wasteage."
The company now has 30 employees, turns over €6m ($8m) and expects to make a profit within 18 months.
Harris is not looking for an exit yet, reckoning that turnover needs to be over €10m and the company profitable to put it on the radar of potential acquirers.
While proud of the success of Froosh, which Harris attributed largely to clever rebranding and public relations, he said the project had growing pains.
"Deciding at which point on the growth curve to add people, and then building the right culture, has been challenging at times, while the unpredictability of volume and revenues had made managing production and cashflows difficult."
He recommended that fellow portfolio company leaders ask for help from wherever they could get it, joking that he expected a call from a Unilever Scandinavia country manager any day asking him to stop bothering his staff.
When Donald Fitzmaurice approached UV looking for funding for a mobile phone marketing service in emerging markets, he was introduced to Unilever in South Africa.
Four months later he returned with a €500,000 contract from Unilever and told Coombs: "If you do not invest in me now, they are going to be really annoyed."
Fitzmaurice’s company, Brandtone, worked on Unilever’s Omo washing powder brand in South Africa on a campaign rewarding customers with free time on their mobiles if they bought Omo. In the process Brandtone was able to collect valuable customer data.
Other clients followed and Fitzmaurice was particularly pleased with the campaign for Carling Black Label beer, in which customers picked teams for a leading soccer match.
A code printed inside each bottle top enabled drinkers to vote for players to be picked for a pre-season friendly between Kaizer Chiefs and Orlando Pirates. Substitutions were also dictated by fans using text or voice messages, creating a viral buzz about the campaign.
UV owns 45% of Brandtone, with the remaining equity divided between staff and new investor Verlinvest, a family-owned Beglian investment holding company. UV sees considerable potential for Brandtone’s services in emerging markets but, given the relative poverty in those countries, the services have to be free to consumers and must work on any phone platform, typically a four-year-old 2G Nokia.
"Most people in Africa have never heard of iPad, or even seen a picture of one," said Fitzmaurice, "so we are focusing our efforts exclusively on phones. But as 40% of the people are illiterate the service needs to be available as both voice and text."
Other portfolio companies deemed a success by UV include P2i and Vhsquared. P2i is now the world leader in liquid repellent nano-coating technology with a 60% market share of the hearing aid coating market. Some mobile phones will soon be covered by the coating, apparently protecting them from submersion in water. Vhsquared, in partnership with Welcome Trust and the Sanger Institute, is creating functional foods aimed at improving gastrointestinal health.