General mills adds kite hill to food start-up investments – the new york times

General Mills, one of America’s corporate food titans, is quietly establishing itself in venture capital, investing in some of the hottest new food companies.

It is just one of a small but growing number of giant food companies that have decided they can no longer afford to sit on the sidelines as smaller, more nimble start-ups outmaneuver them in the race for consumers seeking minimally processed, locally sourced, environmentally sustainable foods free of preservatives and chemicals.

General Mills’ latest investment is part of $18 million going into Kite Hill, which makes versions of cheese and yogurt from nuts — no cows involved.

“Plant-based used to be more synonymous with sacrifice than with taste,” said John Haugen, vice president and general manager of 301 INC, General Mills’ venture capital arm. High profit business in india 2012 “Now, companies like Kite Hill are able to deliver plant-based products that taste good.” Continue reading the main story

General Mills is not the only food company dabbling in venture capital.

What is a high profit margin This year, Campbell put $125 million into an in-house venture capital business called Acre Venture Partners. Highest profit margin products on ebay And Unilever has long had a venture capital unit.

Big food companies traditionally favor mergers and acquisitions, however. Low capital high profit business This week, for example, Hormel bought Justin’s, which makes nut butters and peanut butter cups that are gaining share against longtime market leaders. Low risk high profit business And last year, Mondelez bought Enjoy Life Foods, a snack foods business playing in what the industry calls the “free-from” segment of the market — even though Mondelez also started its own line of such products.

“You could argue that we could just make an acquisition, but what 301 allows us to do is engage in companies that are still small and emerging and keep the chief executive and leadership team in place to help preserve the culture,” Mr. Business ideas with low investment and high profit Haugen said.

Victor Friedberg, managing partner at S2G Ventures, a venture capital firm that invests in food and agriculture businesses, said big food companies are increasingly finding it less costly to invest in or buy small businesses. High profit business opportunities That is because a new business developed internally would have to generate as much as $100 million in sales in its first year to justify the investment of time and money.

“Big food companies have many assets and advantages,” Mr. Business with high profit Friedberg said. Today high profit shares “But developing in-house brands that consumers will perceive as healthier and authentic has been a problem for them — they’re just not designed to do that.”

But most small food companies struggle to develop on a larger scale, which is why Kite Hill elected to take the investment from 301 instead of raising capital through one of the many accelerators and incubators set up to support small food businesses or from a conventional venture capital firm.

“General Mills has tremendous expertise around manufacturing and the supply chain, things that a company like ours can really benefit from as we expect to grow aggressively,” said Matthew Sade, chief executive of Kite Hill. Best business ideas with low investment with high profit “We get inquiries from as far away as Europe, so we know there’s great demand for our products — the question is how do we get there.”

Whole Foods, for instance, asked Kite Hill to make a pumpkin tart marbled with its nut-based cream cheese for the holiday season. Low budget high profit business The product sold so well, Mr. High profit products to sell Sade said, that Whole Foods wanted to stock it year round — but Kite Hill lacked the capacity to meet that demand.

Many small food businesses are wary of taking money from, or getting bought out by, food giants, mindful of the many stories of small, successful companies that are bought only to all but disappear into a multibillion-dollar corporation.

That reluctance has spawned a boom in small venture capital and private equity firms offering to finance small food businesses. Low investment high profit business in bangalore And food entrepreneurs who have cashed out, like Jon Sebastiani, the founder of Krave Jerky, are forming businesses that offer advice and financing to small food companies.

Clayton Christopher, who sold his Sweet Leaf Tea to Nestlé and then last year sold Deep Eddy Vodka for almost $400 million to a Kentucky distiller, is among the founders of CAVU Venture Partners.

CAVU, which announced a $156 million fund to invest in food and beverage businesses this year, has joined General Mills in the Kite Hill investment. Low investment and high profit business (Khosla Ventures, a major Silicon Valley investment firm, and a handful of other investors also put in a small amount.)

“It was kind of a strange, unplanned thing that we ended up in partnership with them,” Mr. High profit margin industries Christopher said. High profit items to sell “But we complement each other — General Mills brings a ton of expertise around supply chains, production, technology and operations, while where we come in is with experience building new, national brands that really appeal to today’s consumers.”

The investment in Kite Hill was drawn up before the Wall Street rumor mill began excitedly discussing General Mills as a target for 3G Capital, the giant Brazilian private equity firm that owns Kraft Heinz, Burger King and Budweiser. High profit shares 3G is infamous for cutting costs and cheapening ingredients to achieve large increases in profit margins, striking terror into big companies and small.

Mr. High profit crafts Sade demurred from commenting on the rumor, saying he was “far removed from the world of private equity, where they move large pieces around on the chessboard.”

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