Kellogg Mimics Unilever and General Mills and Sets Up Fund to Find Tomorrow’s Star Companies

21 Jun 2016 –-- Kellogg is following the likes of General Mills and Unilever by launching an investment fund which will invest around $100m in start-ups, in the hope of identifying the Chobani of tomorrow.

The investment fund, called eighteen94 capital, will make minority investments in companies "pursuing next-generation innovation" including start-ups pioneering new ingredients, foods, packaging and technology.

Gary Pilnick, vice chairman of Kellogg, said: "As consumer preferences move toward more diverse tastes and trends, the pace of innovation in the packaged food industry continues to intensify.”

"By investing directly in the most promising entrepreneurs and ventures, we can increase greatly our access to game-changing ideas and trends that could become significant sources of growth for us. “

“At the same time, we will be providing these companies with essential growth capital and access to Kellogg resources and expertise, which will help drive their ideas and businesses. It's truly a win-win."

Kellogg said the $100m identified will look to invest in businesses which the cereal maker believes will lead to long-term growth and those that are already making money.

While focusing on start-ups, the Special K maker said it could invest in those businesses which are more developed if they represent a good fit.

Eightenn94 capital will be managed by Simon Burton, a 10-year executive at Kellogg.

In addition, Kellogg has partnered with Touchdown Ventures, which specializes in corporate venture capital, to assist with management of the fund.

"We want to help take our partners' innovative spirit and passion as far as they can go," added Burton.  "We want to help create the ideal conditions for growth; that's why we believe that 1894 will become the destination for ideas."

The move taken by Kellogg mirrors those taken by other food companies, such as Campbell Soup, General Mills and Unilever.

Food giants believe that by investing in start-ups, they can make up for the shortfall of producing successful products organically.

General Mills’ 301 Inc investment fund has made a number of investments recently including Good Culture, the cottage cheese maker.

Unilever's Foundry initiative, meanwhile, set up in 2014, is focused on funding tech starts-up which Unilever believes will add to its arsenal.

Unilever has invested millions of dollars in over 60 pilots.