Modern consumer corporations generally continue to pump out the kind of products that the world population simply cannot stop buying. Yet these industries, which have been brutally competitive, as well as profitable, since ancient times, are being transformed by a rapidly growing world population, where consumer spending power is truly globalising.
To keep up with the changing times, many of the world’s biggest consumer brands are turning to venture as one of the tools to keep up with the frenetic pace of change.
Funds
As we report today, the corporate venturing unit of Anglo-Dutch consumer goods group Unilever, has now raised a $450m third fund, taking its assets under management to $1.2bn. Unilever Ventures, which we have again named our most influential consumer corporate venturing unit, has developed its strategy further, particularly by fleshing out its area of focus.
Martin Grieve, the head of the unit (see profile), said the group had now focused on four particular sectors – personal care, refreshment, digital marketing and sustainable business. Grieve said: “Looking at our current portfolio, we have investments in each of these four areas. What this does is clarify the areas we are most interested in.
“This is not to say we have radically changed focus. We are actively hunting for deals which can receive significant added value from Unilever.”
Consumer corporates continue to stretch their links into global markets through early-stage investing. For example, drinks company PepsiCo recently expanded its PepsiCo10 into Brazil.
Other groups are tackling early-stage by teaming up with well-regarded specialist groups. Nike has launched Nike+ Accelerator, powered by accelerator TechStars in a mentor campaign that will host 10 companies for a three-month start-up accelerator.
Some groups are scouting parts of Asia for trends. Rakuten, a Japan-based online retailer,
started a $10m corporate venturing fund to invest in south-east Asia. Omnivore Capital, an India-based
agricultural fund backed by Godrej Agrovet, is shortly expected to raise a $50m fund.
Omnivore Capital venture partner Mark Kahn said fundraising “should be done in another month.
We had the first close in April 2012. We should cross $50m”.
Kahn added Godrej Agrovet would take 10% of the fund.
Tate & Lyle, a London-listed sugar maker, committed £30m ($50m) to its second corporate venturing fund that will have an eight-year investment period.
Deals
Last year Global Corporate Venturing tracked 186 deals in the consumer sector worth $4.2bn.
In the food sector, examples of where corporates are investing include Arlon backing Kettle Cuisine, an artisan maker of refrigerated and frozen soups, and Unilever Ventures backing Snog, a maker of frozen yogurt.
Switzerland-based consumer goods company Nestlé invests regularly in healthcare, with its
deals last year including UK-based vaccine company ImmunoBiology, which raised £3m.
US-based drinks company Coca-Cola last year invested $10m in music streaming company Spotify as part of a $100m series E round led by Goldman Sachs.
Corporates are playing to other trends, such as the evergreen demand for baby products. Tengelmann Ventures, the corporate venturing unit of the Germany-based company, last year increased its stake to a majority in local baby products company Babymarkt.de.
The industry around consumer packaging is also a fruitful area of investment. Last year Unilever Corporate Ventures-backed P2i, a UK-based nanotechnology company, which makes liquid repellent nano-coating products, raised £12m.
Some new entrants into the sector are beginning to invest. Tobacco maker Altria Group made its first disclosed corporate venturing deal by buying 5% of Micreos, a Netherlands-based developer of anti-bacterial phage technology.
It also invested $2m in series B funding for US-based Sharklet Technologies, a developer of bacteria-inhibiting micro-texture surface technology.
The intersection of media and fashion is a seemingly big investing trend in both directions. In February, France-based luxury goods company LVMH backed UK-based fashion publisher Business of Fashion in a $2.1m seed round.
Rakuten, a Japan-based online marketplace, led a $100m investment in US-based social network Pinterest last year and also backed its $200m round in February.
The investment was also a strategic partnership between Rakuten and Pinterest, and the Japan-based internet retailer said it would help expand Pinterest in Japan and Rakuten’s 17 other markets.
US-based fashion publisher Condé Nast, and its holding company Advance Publications, has been busy backing fashion start-ups, taking parts in rounds including those of FarFetch, a UK-based online market for independent fashion labels, and Rent the Runway, a website for the rental of designer clothes and accessories, in the previous quarter.
Amazon reportedly continued to back US-based voucher company LivingSocial last quarter, despite writing down an earlier investment in the company.
Other corporates outside the consumer sector using corporate venturing to pick up on trends in the sector include US-based credit card company American Express. Its corporate venturing unit, Amex Ventures, backed the $41.5m round raised by Warby Parker, a maker of spectacles.
People
US-based Monsanto has brought in John Hamer to head a new growth ventures unit which we will be profiling in an e-zine comment later this month.
Switzerland-based crop seed developer Syngenta hired David Pierson from venture capital firm Intersouth Partners as a managing director of its corporate venturing unit.
Pierson joined Syngenta Ventures after seven years as a partner at US-based Intersouth.
In important company management changes, US-based consumer goods company Procter & Gamble (P&G) named 22-year P&G veteran Laura Becker as head of its global business development group, responsible for the company’s Connect+Develop innovation programme.