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Venture Capital Moves Into Health Food Category - Health Minute for May 14, 2013



Venture capital is moving into the healthy food category. Just as socially responsible investment, SRI, has found opportunities in the renewable energy and innovative health care sectors, Silicon Valley VCs are now focusing on new, healthy food products and services that align with their progressive agendas in those other areas. Last year, Valley VCs channeled $350 million dollars into food projects. Investment deals in the sector were 37 percent higher than the previous year, according to CB Insights, a venture capital database.

By comparison, in 2008, that figure was less than $50 million dollars. Investors range from blue chip firms like Kleiner Perkins Caufield and Byers to celebrities Matt Damon and Tom Brady to tech titan Bill Gates. The new start-ups are using technology to change the way people buy food, such as creating Internet marketplaces for artisanal goods and dinner kits. In other cases, the goal is to invent new, healthier foods, such as nondairy cheese, vegetarian substitutes for meat, and candy with reduced sugar and no artificial additives.

This interest in transforming the food industry follows a recent report that ranks food companies from a health point of view. The first Access to Nutrition Index sets out to benchmark 25 global food companies on their nutrition formulation and policies, delivery of affordable healthy products, and positive impact on consumer choice and behavior.

Topping the list are Danone, Unilever, and Nestle, which scored highest in governance, products, accessibility, marketing, lifestyles, labeling, and engagement. The sobering news is that even these leaders in nutrition-related initiatives managed only an average score of six on a scale of zero to ten. This gap between commitment and execution leaves open a large window of opportunity for healthy food innovation, an opportunity that VC-backed companies hope to exploit—and profit from.

The Nutrition Index report is sponsored in part by the Bill and Melinda Gates Foundation, support that certainly raises its profile among the Silicon Valley VC set. So does the fact that the report will be updated in two years. You can bet that the 2015 Index will rank new, health-oriented companies that are just now putting their products onto grocery shelves and into your kitchen, and their services on your computer screens.

I’m John Howell for 3BL Media.

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KEYWORDS: Danone, Unilever, Nestle, Bill and Melinda Gates Foundation, venture capital, The Nutrition Index, 3bl Media, Health, Health food, Health Minute

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