Dive Brief:
- Banza co-founder Scott Rudolph's experience transitioning from Wall Street to food industry entrepreneurship (via the chickpea pasta startup co-founded with his brother) offers lessons for executives looking to invest in or acquire a food or beverage startup.
- Because startups don't yet have the established relationships that major manufacturers do with distributors, retailers, suppliers, and other members of the supply chain, this is one of the key areas acquiring or investing companies can be of most help.
- Due diligence is an obvious component of the investment and acquisition process, but remaining objective about a company's performance and timing a deal to capitalize on growth and momentum for the startup will give the larger company the biggest return.
Dive Insight:
Through his Banza experiences, Rudolph also learned about the importance of playing to his strengths and the strengths of his brother and partner. When it comes time to acquire or invest in a startup, executives weigh the strengths of their company versus the strengths of the startup.
The startup may be more proficient at creating disruptive innovations in terms of products or product segments. The larger company should then consider stepping back and allowing the startup to play to that strength rather than trying to impose a corporate strategy that could hinder that innovation at the outset. At the same time, the larger company should play to its own strengths by leveraging its supply chain to provide the startup with the best ingredient prices, relationships, and operational capabilities and efficiencies to ensure optimum growth potential for that innovation.
Mondelez has demonstrated the back-and-forth learning startups and major manufacturers can share with each other through efforts like its Enjoy Life Foods acquisition last year. Enjoy Life chief sales and marketing officer Joel Warady told Food Dive last year that Mondelez had been a valuable partner because the company realized early on that it should allow Enjoy Life to operate as a standalone company and play to its own strengths.
At the same time, Mondelez offered the startup capital resources and expertise it didn't have at that time, which improved product quality and production efficiency. Mondelez also offered introductions that were previously not accessible to Enjoy Life, which enabled the startup to accelerate its efforts in the foodservice industry.