Nestle?s VC sweet spot

Nestlé, the global food company, has announced the launch of a CHF200 million (euro135 million) corporate venture fund. The global fund will be dedicated to investments in food and life science companies, as well as packaging and other commercial applications relevant to Nestlé, whose diverse business activities include pharmaceuticals, cosmetics, pet foods, coffee, bottled water, baby foods, chocolate, confectionery and other food products.

An independent team, not yet appointed, will manage the fund. Over a ten-year period the company expects it to produce returns in line with other venture capital funds.

The primary motivation behind the fund is the strategic benefits it will bring. Nestlé hopes the fund’s investments, which may be at any stage in a company’s development, will give quick access to technologies it has not developed itself, as well as financial returns. In a statement the company said it was confident the fund would broaden R&D potential, accelerate changes in research and facilitate access to, and co-operation with, the founders of start-up companies.

The fund will act in a variety of ways, making acquisitions, taking minority stakes and participating in licensing agreements and joint ventures. It also provides the possibility to bring Nestlé research and development projects, particularly those of a high-risk nature or those that do not fit the company’s strategic priorities, to the market as spinouts.

Also this month, IMEC, a Belgian research centre for information and communication technologies and microelectronics, launched a €5 million incubation fund. It will support the launch phase of spin-off companies, helping entrepreneurs prepare technology and prototypes for market launch and assist in setting up the commercial, financial and organisational strategy of the company. Other shareholders in the fund include KBC Investco, Fortis Private Equity N.V., Software Holding & Finance N.V. and V.E.M. Chaudfontaine CVBA. This year, at least three projects will be proposed to the fund, focused on telecommunication and biotechnology.