While Nestle and Unilever are the main European corporate angels (the start-up could be in any country, however), there is a great deal of similar activity across the Atlantic. The cola rivals have been very active. Says Jeff Dahncke, a New York-based spokesperson for PepsiCo: “PepsiCo has always been at the forefront of exploring innovative ways to connect and engage with consumers. PepsiColO is an incubator programme we ran from 2010 to 2012 to connect technology, media and communications entrepreneurs with PepsiCo brands. The programme has been run in the US, Europe and Brazil.”
PepsiColO was not as broad-based as other MNC initiatives. It was limited to digital media and a venture with the start-up for Pepsi’s new age marketing campaigns. “PepsiColO was launched with a specific focus on identifying new trends and technologies in the fields of digital media and social marketing,” says Dahncke. Among the success stories are Aisle- Buyer, a mobile shopping platform, which was later sold to Intuit for $100 million; Evil Genius Designs (a boutique design group): and Tongal (which crowd sources creative work).
Where PepsiCo has dipped its toe in the waters, rival Coca-Cola can’t be far behind. In fact, it is well ahead. Coca-Cola has created an accelerator programme. Unlike traditional accelerator programme that focus on investing in promising start-ups, the Coke programme concentrates on codesigning, collaborating and building with start-ups, to bring its ability to scale “to unlock new ways to create value on a global basis”.
Coca-Cola launched its first accelerator in Sydney on 1 August 2013. Eight more cities form the first phase of the rollout. Coca-Cola is also participating in Start-up Weekends: 5 4-hour events where developers, designers, marketers, product managers and start-up enthusiasts come together to share ideas, form teams, build products, and launch start-ups.
This was actually Coke’s second effort to support start-ups. In 2001, it formed a subsidiary called Fizz- ion, which would provide up to $250,000 for each new venture. In exchange, Fizzion would take a 12 per cent stake in each of the 10-15 startups it planned to recruit to its incubator. Fizzion, however, lost its fizz somewhere along the way.
In another initiative, Coca-Cola has set up a Venturing and Emerging Brands (VEB) division. Based in Atlanta, the team of around 15 identifies and invests in niche brands. The company’s Website notes: “Coke’s veb team was created in 2007 with
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An ambitious mission: to identify and build the company’s next generation of billion-dollar brands in North America. Part venture capitalists, part brand incubators and part industry forecasters, the team invests in and builds groundbreaking beverages that satisfy unmet consumer needs.According to VEB president Deryck van Rensburg (quoted on the Coke Website): “The sheer scale and intensity of entrepreneurial innovation taking place in our industry has opened our eyes. Based on past experiences, we estimate that as much as one-third of our industry’s growth in North America over the next five to 10 years could come from disruptive brands in categories that do not exist today… Our team is hopefully helping bring a slightly more entrepreneurial lens to the organisation. We are becoming a more ambidextrous company capable of managing big and small brands together. Deep down, everyone at Coke wants to be more entrepreneurial… to be more proactive, to take more intelligent risks, to be more outwardly focussed. Entrepreneurs understand that Plan A rarely works. Knowing how to pivot, course-correct and leverage your networks and resources when things don’t go as expected is a valuable skill everyone should develop.”
Among the VEB successes are Fuze Tea (which Coke bought for an estimated $200 million); NOS (an energy drink popular amongst
md auto enthusiasts); Honest Tea (Coke invested in a 40 per cent stake in 2008 and bought up the rest of the company in 2011); Zico Coconut Water; and juice maker Odwalla (bought for $181 million). All these are now part of the Coke stable. Will any become billion dollar brands? The jury – and the consumer – has still not decided.