Manufacturers and retailers aren’t waiting for the next big idea. In this report from PLMALive Bob Vosburgh takes a look at retailers and manufacturers actively soliciting small start-ups through venture capital funds, idea workshops and other enticements.
Dollars for Donuts
This fall, 100 Walmart executives will break away from their offices and cubicles to hear pitches from more than two dozen startup companies as part of a Technology Innovation Open Call. The retailing giant is looking for any cutting-edge idea that can be applied to warehousing, retail operations, big data, logistics… you name it.
[KGVID width=”600″ height=”320″]http://c0000626.cdn2.cloudfiles.rackspacecloud.com/2016_06_Bob.mp4[/KGVID] The winners will be invited to move into Walmart headquarters to further develop their programs with the full support and guidance of the retailer before bringing that technology to Walmart stores.
Retailers and manufacturers are adopting a host of exceptional methods like these talent auditions to seek out and nurture new companies, and smart ideas without a home. Other applications include in-house creativity labs, and venture capital funds that invest millions in fledgling food and technology startups.
Competition is one reason driving companies to apply these innovative practices. The race is on to find the best new idea before anyone else. Wait too long, and a rival is likely to snap it up.
The other reason is sheer need. Branded manufacturers, especially, are facing tough times. Study after study shows that consumers are losing faith in brands.
According to Mintel, a mere 36% of consumers it polled trust large companies. Marketing firm Catalina found that — of the top 100 CPG companies in the U.S. — 90 lost market share during the survey period.
Getting in on the ground floor is the surest way to grab a new idea, and venture capital is the way to go. Manufacturers and some retailers are joining with financial investors to snap up young companies that have viable ideas or products, but need capital to grow.
Among the big brands, General Mills last year created a venture capital business unit named 301 Inc. It’s already put money into three small regional companies, most recently cottage cheese maker Good Culture… Campbell Soup has 125-Million dollars ready in a new venture capital fund called Acre Venture Partners.
Retailers are willing to ante up as well. In 2013, the 7-Eleven convenience store chain created 7-Ventures, to discover and help bankroll consumer-facing technologies. To date, 7-Eleven has invested in five startups.
Perhaps the most interesting development, however, is happening in-house — companies creating their own think tanks. Unilever has been a leader in this area. It created the Foundry, a tech-driven entry point that offers competitions, networking events and mentoring to small companies with workable ideas. Target joined forces with MIT and others to open “Food-plus-Future coLab,” a multi-year collaboration involving entrepreneurs, and discussions about the future of food and food issues. One idea it’s testing would allow customers to price fresh produce based on real-time nutritional value.
And, Walmart Labs has been busy working on the way the retailer interacts with customers through mobile technology. The Labs is also actively acquiring small tech startups as it builds its enterprise.
Needless to say, the food sector, and all that touches it, is ready for investment right now, and there are devotees even outside of manufacturers, retailers and Wall Street. Academy Award-winning actor Leonardo DiCaprio has just invested in Runa, a caffeinated beverage made from a plant found in the Amazon. And, Grammy-winning singer Beyonce’ has plunked down some cash on Watermelon Water, the three-year-old juice brand.
It looks like everyone wants to get in on the act.