Circadia Ventures manages the funds of corporate venturing unit Tate & Lyle Ventures. Tell us about your fund and lessons you have learnt over more than 11 years.
In 2006, few corporates in the food sector were operating venture funds. Those that did were in-house and managed off the balance sheet, apart from Nestlé-backed Inventages that had a much wider brief than its corporate backer. It is to the credit and vision of Tate & Lyle’s then CEO, Iain Ferguson, who had already been instrumental in setting up Unilever’s venturing activities, that Tate & Lyle Ventures was born.
Operating as an independent fund and externally managed by Circadia Ventures, the structure of the fund has changed little to this day, despite the inevitable changes of personnel at the corporate, including a new CEO, Javed Ahmed, in 2009. Fast forward to 2017 and a number of fast-moving consumer goods groups have now established their own venture fund units, especially in the US, with a variety of operating models – in-house, externally managed or a hybrid.
What lessons have we learnt over the past decade for managing a successful corporate venture fund?
We have identified a few key aspects, which have remained a constant during those years and across both of the funds Circadia operates for Tate & Lyle.
1 A simple structure. Tate & Lyle Ventures is structured just like any other independent venture capital fund. This is a structure that all potential investee companies and, crucially, other investors recognise and feel comfortable with.
2 The relationship with the corporate is transparent. For example, Tate & Lyle holds no special rights or requirements regarding, say, internal sponsorship with a potential investee company before agreeing to investment.
3 A simple decision-making process. Potential investee companies see corporates as slow decision-making bodies. This puts them at a disadvantage in venture capital. Tate & Lyle Ventures’ investment committee meets monthly to make quick investment decisions, and more regular meetings can be called as necessary.
4 A clear pre-agreed scope. The corporate and the manager should fully debate and discuss the remit of the fund before launch. This needs to be a balance between corporate strategy and the fund’s requirement for sustainable and investable dealflow. It is important to get senior level engagement because, with a fund life of up to 10 years, corporate strategy can change quicker than the fund’s scope.
5 Engagement with all levels of the corporate structure. As important as it is to have high-level executive buy-in and support, wider engagement and understanding of the fund’s aims throughout the organisation is vital.
6 Clear and quick response. Not every opportunity will fit with the fund’s ambitions or scope, especially when the fund is as focused as Tate & Lyle Ventures on food sciences and technologies. That said, clear, quick and helpful feedback to prospective partners is important, especially when you are often the most visible part of the innovation programme of the corporate.
Ultimately Tate & Lyle Ventures’ success can be put down to balancing Tate & Lyle’s strategic aims and ambitions with regards to the innovation in the food sector, with the discipline and focus on financial return of the venture capital fund. It has served us well for over a decade so far.
David Atkinson and other leading corporate venturers will feature in Andrew Gaule’s new book – Purpose to Performance: Innovative New Value Chains – details can be found here.
You can listen to other interviews on a podcast – subscribe at gaulesqt.podomatic.com. Andrew Gaule supports innovation programs and collaborations with “innovative new value chains” in global organisations as CEO of Aimava. If you have interview ideas, email andrew.gaule@aimava.com or James Mawson jmawson@globalcorporateventuring.com