March 22, 2019

Starbucks announced it is making a $100 million investment in Valor Siren Ventures Fund (VSV), a newly launched venture fund that will back the next generation of food and retail technology startups.

In the coming months, VSV said that it is aiming to raise another $300 million from other outside investors.

“We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail, and our digital flywheel,” said Kevin Johnson, president and CEO, Starbucks.

Managed by Chicago-based Valor Equity Partners, a leading growth private equity investment firm that is a backer of Tesla and a long-time investor in food tech, this new fund will identify and invest in innovative companies that are developing new technologies, products, and solutions for the food and retail sectors.

Founded in 1995 by managing partner and CIO Antonio J. Gracias, Valor Equity is a previous investor in SpaceX, Tesla, Eatsa, Fooda, and Wow Bao, among others. And in July of last year, raised $1.05 billion for its Fund IV, bringing the total funds raised by the company, at the time, to more than $2 billion.

The fund also will act as an incubator for startups with which Starbucks can partner, and gives the company first-hand access to innovations that it can leverage to advance its own technology and retail platforms.

“At the same time, and with an eye toward accelerating our innovation agenda, we are inspired by, and want to support the creative, entrepreneurial businesses of tomorrow with whom we may explore commercial relationships down the road,” said Johnson. “This new partnership with Valor presents exciting opportunities, not only for these startups, but also for Starbucks, as we build an enduring company for decades to come.”

I Think We’ll Need a Bigger Wagon…

In recent years there has been a flurry of accelerators and venture capital arms launched by large CPG companies. This reflects the continued truth 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.

The move to launch venture capital arms and accelerator programs or incubators has become a widely used method by some of the world’s largest and most conventional companies to achieve diversification, and to gain a foothold and to establish relevance in a swiftly changing consumer market. CPG companies also use these programs as a means to stay a step ahead of their competition while realizing the growth potential in disruptive food innovation.

Others that have come before include:

General Mills, which launched 301 Inc., in October 2015 – a venture capital arm that has gone on to outrank the likes of Time Warner and Merck for investment activity.

Campbell’s Soup, which launched its $125 million venture capital fund, Acre Venture Partners, in February 2016.

Anheuser-Busch, which partnered with Techstars to launch an accelerator in April 2016.

Danone, whose venture capital fund Danone Manifesto Ventures made its first investment in June 2016 in France’s Michel et Augustin, a producer of premium biscuits, dairy products, fresh desserts, and beverages.

Tyson, which launched its $150 million venture fund, Tyson New Ventures, in December 2016.

Kellogg’s, which launched its venture capital unit, eighteen94, in January 2017, making its first investment in Kui Kuli, a manufacturer and distributor of moringa-based bars, powders, and energy shots.

Barilla, which launched Blu1877, a hybrid venture capital fund and innovation hub, in November 2017.

Pepsi, whose PepsiCo HIVE made its first investment in Health Warrior, a producer of plant-based and superfood snacks and protein powders in October 2018.

And Mars, which announced the launch of Seeds of Change™, an early stage, food-focused accelerator, in March of this year.

At this point, an initial investment for the Valor Siren Ventures Fund has not been disclosed, however a company statement noted that Starbucks is “embracing new ideas and innovations that are relevant to Starbucks customers, inspiring to its partners, and meaningful to its business.”

Valor Equity CIO Antonio J. Gracias said, “as experienced investors in food and retail technology, we are thrilled to partner with Starbucks, one of the most iconic and forward-thinking global brands. Under our partner Jon Shulkin’s leadership, we are incredibly excited to partner with Starbucks to drive innovation in the food and retail industries.”

~ Lynda Kiernan