Through VC arm, General Mills bets veggie chips startup can't be beet

Dive Brief:

  • Known for its kale, beet and broccoli chips, startup Rhythm Superfoods recently closed a $6 million round of financing led by 301 Inc., General Mills' venture capital arm, according to a company statement. General Mills previously invested in Rhythm Superfoods during a $3 million financing round last year.
  • Additional financing in this round came from Blueberry Ventures and the CircleUp Growth fund. The company plans to use the funds to scale up, expand capacity, support sales and marketing initiatives, and drive innovation, with a goal of positioning Rhythm Superfoods as a leader in plant-based snacks.
  • “Rhythm Superfoods is the first company that 301 Inc. partnered with after launching our strategy in late 2015," John Haugen, vice president and general manager of 301 Inc., said in a statement. "Rhythm Superfoods continues to be an innovative company in the better-for-you snack category."

Dive Insight:

By contributing a second round of financing to the Texas-based startup that is known for its kale, beet and broccoli chips, General Mills is betting on Rhythm Superfoods and the vegetables-as-snack-chips trend.

The investment is not a surprise: Rhythm Superfoods' products are selling well, with CEO Scott Jensen estimating to Bloomberg that last year's sales were worth $10 million — an amount he believes will double in 2017. The product is intended to appeal to health-conscious consumers who are frequently on the go and often snack instead of eating sit-down meals.

Through its 301 Inc. venture capital arm, General Mills has been seeking out promising food startups. In a presentation last May, General Mills Technology Director Erika Smith said the company is bullish on plant proteins, but the higher costs of developing and working with them is a major hang up. By investing in a growth company like Rhythm Superfoods, General Mills can gain some of that knowledge and expertise without assuming the full cost of building a plant protein-based food brand from scratch. The company's venture capital arm has also invested in plant-protein substitute Beyond Meat.

General Mills' net sales have fallen 7% over the last year, according to their most recent quarterly report. While problems in the yogurt segment contributed to the poor earnings, it makes sense for General Mills to bet on a growth company and expand its horizons through up-and-coming segments that could result in some big product hits. 

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Filed Under: Corporate Meat / Protein
Top image credit: Rhythm Superfoods