Tyson Foods Launches $150M Venture Capital Fund

Tyson Foods has announced the launch of Tyson New Ventures LLC, a new $150 million venture capital fund dedicated to investing in food companies developing technologies, products, and business models that answer the challenges posed by a growing global population.

More specifically, the fund will concentrate on three areas – alternative proteins, food insecurity and food waste issues, and the “internet of food”, in order “to promote more precise and productive resource application, safety, and consumer empowerment in the food chain”, according to a company statement.

“We intend to collaborate with promising food entrepreneurs who are pioneering new products and technology that are making meaningful changes and improvement to food systems,” said Monica McGurk, executive vice-president of strategy and new ventures and president of food service for Tyson Food.

“We believe we can accelerate the growth of start-ups through our capabilities in such areas as food and culinary research and development, sourcing, insights, customer relationships and distribution. By doing so, we hope to materially advance the state of the U.S. and global food system.”

Tyson New Ventures has already acted on this new investment model, announcing last month its acquisition of a five percent stake in plant-based protein company, Beyond Meat, as part of a financing round that included previous Beyond Meat investor, the Humane Society of the United States.

Speaking on the Beyond Meat investment, Monica McGurk said, “We’re enthusiastic about this investment which gives us exposure to a fast-growing segment of the protein market. It meets our desire to offer consumers choices and to consider how we can serve an ever-growing and diverse global population…”

And Another…

This announcement by Tyson adds the company to a growing list of leading “Big Food” companies that have launched venture capital units as a means of gaining early involvement with innovative startups that could give them a foothold in a shifting consumer market.

As long-term established brands face slowing sales as consumers opt for new products that offer a fresher, more transparent take on food, venture capital investments in food and agriculture have tripled over the past five years, according to Dow Jones VentureSource to $647 million last year reports the Wall Street Journal.

More recently, in the first three quarters of this year, venture capital investments in the space have reached $420 million as more and more “Big Food” players launch their own VC funds.

One of the most prominent such funds is 301 Inc. launched by General Mills in October 2015. Others include the $125 million Acre Venture Partners launched by Campbell’s Soup, Eighteen94 (1894) Capital launched by Kellogg’s, Startup Next Food & Tech, which was launched by Land O’Lakes in partnership with Techstars, and Techstar Connection, launched by AB InBev’s venture arm, ZX Ventures, also in partnership with Techstars.

Tyson’s fund will be headquartered in Chicago and will be led by vice president and general manager, Mary Kay James. Ms. James, who was previously managing director of DuPont Ventures, and her team will pursue investments in startups that are complimentary with Tyson’s existing business portfolio and product development pipeline.

"This fund is about broadening our exposure to innovative, new forms of protein and ways of producing food, while remaining focused on our core fresh meats, poultry and prepared foods businesses, which are also experiencing tremendous consumer demand and growth," noted Ms. McGurk.

Indeed, the strategic move of launching a venture capital unit has the potential to be mutually beneficial to both the investor and the startups involved – giving the investor the ability to foster research and development that can boost their existing business while also fostering the commercialization of innovative technologies and products without assuming the entire risk. Meanwhile, if certain startups are successful, the initial investment gives the investor a proprietary stance in regard to a full acquisition at a later date.