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Tyson Venture Fund Looks to Future of Food

6 min read

Burgers made from vegetables? A smartphone app that alerts potential diners to discounted meals at a restaurant? Data analysis to determine the precise amount of fertilizer to use on small farm plots?

Tyson Foods Inc. of Springdale is interested in all of those concepts and more, and plans to use the company’s considerable resources to explore how to make them work on a large scale. Tyson announced in early December a $150 million capital investment fund it calls Tyson New Ventures LLC to invest in innovative food companies and technologies.

The fund’s first recipient was chosen before the fund was announced. In October, Tyson acquired a 5 percent ownership stake in Beyond Meat, a private company that makes meatless burgers sold in Whole Foods stores.

For Tyson, the investment in Beyond Meat and the future investments of the fund are about expanding its innovation efforts through an external network. Tyson is not alone in this as numerous food and agricultural companies such as Monsanto, Coca-Cola and Kellogg’s have created funds or internal divisions to expand their innovative reach outside the company.

Monica McGurk was hired by Tyson in April as its executive vice president of strategy and new ventures. She said New Ventures’ outside investments are meant to complement Tyson’s already robust internal innovation.

“There is such a high degree of entrepreneurial activity, emerging technology and investment in agriculture and food right now that it just makes sense for us to tap into that network, to broaden our view of the world,” said McGurk, who also is president of food service at Tyson.

“It’s a very smart resource play. For us, I think it will be a fabulous stimulus to our culture to have another source of inspiration, another source of external trend sourcing.”

Tyson New Ventures will be run by Mary Kay James out of Chicago. James has a wealth of experience in venture capital, including time as a managing director at DuPont Ventures.

McGurk joined Tyson from Coca-Cola, where she had worked with that company’s emerging brands and ventures teams.

She was brought aboard with the Ventures fund idea already in the planning stages, and her early months were spent helping develop the company’s strategy and goals.

“A significant part of my early days here at Tyson were spent learning what role Ventures could have, as well as reaching out into the venture capital community to learn different practices, different models for applying venture capital to make the right choice for Tyson,” McGurk said. “My role at Coca-Cola definitely gave me exposure to this part of the world.”

Meatless Marriage
Tyson’s first plunge was outside its pork, chicken and beef wheelhouse with the investment in Beyond Meat, which is a darling of the vegan set.

Beyond Meat founder and CEO Ethan Brown posted a statement on the company’s website to explain why he chose to partner with Tyson when his earlier investors included such organizations as the Humane Society of the United States. Brown said Tyson’s use of animals for food goes against his personal beliefs, as do the diets of many friends and relatives; it doesn’t make Tyson an “enemy.”

“My willingness to engage with Tyson may unsettle the most ardent supporters of our brand,” Brown said. “I don’t expect to change Tyson. Nor does Tyson expect to change me. Instead, we both intend to serve the changing consumer.

“The good news is that Tyson and I can — and do — agree on many other things including: the need for sustainable protein for a growing global population; that innovation can fuel growth and profit; and that business best serves the consumer by offering choice.”

McGurk said the fund will focus investments in three main areas: alternate sources of protein, of which the vegan Beyond Meat is a clear example; combating food insecurity and food loss; and the Internet of Food.

The Internet of Food combines data collection and interactive internet to help consumers make better food decisions. Examples include a refrigerator that can tell people when fruit is going bad in the crisper drawer or can recommend healthy recipes based on ingredients inside.

McGurk said research has shown food loss amounts to many billions of dollars annually. One idea Tyson is exploring is a cloud-based app that a restaurant can use to alert consumers that it will be offering food at a discount near closing time; the app would allow diners to save money while restaurants would still make profitable sales while avoiding food waste.

It’s the same pricing concept airlines and hotels use to book empty seats and rooms. While such an app could be made workable for a single restaurant, Tyson’s market reach and restaurant connections could make the idea usable on a much grander scale.

“Every point in the food chain, we’re missing opportunities to connect hungry people with nutritious food that could meet their needs affordably,” McGurk said.

“Tyson has in its DNA a really radical focus on eliminating waste in our value chain,” she said. “It’s part of the way we run our operations.”

Tyson and Beyond Meat made clear the vegan company would still be independently run by Brown’s team. Tyson’s involvement, though, will allow it to learn more about the growing market for non-meat proteins.

Goal Is to Learn
McGurk said the overarching goal of the fund — whether it invests in alternative proteins or a farming efficiency app or a restaurant pricing guide — is to help Tyson learn more about new technologies and business models.

“By getting exposure through smaller investments to the entrepreneurial activity we’ll be able to learn about how the market is evolving, what degree of acceptance is becoming the norm, what technologies and platform emerge as the winners over time,” McGurk said. “The learning, of course, will be very valuable as we think about our overall strategy, our internal innovation efforts and things of that nature.”

Win Some, Lose Some
McGurk said the venture fund is scheduled for approximately an eight-year run with most of the expenditures happening in the next four. Each partnership will differ; Beyond Meat will run independently, but the next investment might have Tyson assuming a more active consulting or operational role.

“Out of the portfolio of investments that we make, we’re hoping to build the next leading businesses over time,” McGurk said. “Some of those portfolio investments will grow into full-fledged businesses that if they are not great candidates for spinning out to some other natural owner could become great platforms for us.

“It’s a combination of betting on the future, hedging our bets a little bit but very much complementary to the way we think about growth and innovation overall.”

Tyson’s growth is important because it will help the company’s purpose: helping feed the world in a sustainable way.

“Some of these partnerships will fail; we’re expecting that not every one is going to be a home run,” McGurk said.

“In fact, that’s part of the design: Make lots of small bets. Some will pay off, some won’t. When that is the case, we’ll find the right option for that company, as well.”

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