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Kellogg’s venture capital arm to invest ‘very broadly’ in food categories

By Douglas Yu contact

- Last updated on GMT

Kellogg’s venture capital fund, eighteen94 Capital, is planning to invest in various food categories around sustainability and functional ingredients next year.

Speaking at a Chicagoland Food & Beverage Network’s innovation breakfast session, managing director of eighteen94, Simon Burton, said the team is looking “very broadly”​ for investment opportunities, hoping to gain mutual benefits between food entrepreneurs and Kellogg.

Eighteen94, along with Conagra Brands, are the latest investors behind Chicago-based food incubator The Hatchery​. It also funded the Colorado-based MycoTechnology this year, which produces a “bitter blocker”​ that takes bitterness out of food and beverages, as well as a protein additive made from fermented mushrooms.

However, unlike The Hatchery, which primarily focuses on startups looking for space to begin their production and build their brands, eighteen94 funds companies “that are probably a little further along in continuing their establishment ... larger companies with a revenue base between $5m to $10m,”​ said Burton.

“If there is a way we can see return from our investment, then we’re looking for some strategic benefits for us and entrepreneurs,”​ he added.

“By having return being our first measure, many entrepreneurs may wonder if it’s worth doing business with a big corporate’s venture capital. We align ourselves as much as possible with the entrepreneurs and the growth of their companies.”

He said the strategic benefits for Kellogg could be centered around knowledge transfer.

“A lot of the companies we talk to play in places we don’t play or we really don’t have the right to play, given our current business. We may get a commercial arrangement; distribute products we may use; or a business we eventually would like to own… It’s a long way out.”

Commenting on snack trends, Burton said the category has been driven by convenience and new flavors.

"Obviously, different ingredients have their unique benefits, so I think we will see energy ingredients as it relates to protein in the snack space continue to increase.

“On top of that, the functional benefits are how snack businesses can differentiate themselves,” ​he said.

Eighteen94 said it will continue identifying disruptions in the food industry in 2018. 

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