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VC Fund Serves Up New Future For The Grocer Industry

Photo Courtesy GIANT

On April 9, the grocery landscape changed forever. Five of the biggest retailers representing different parts of the world — Ahold Delhaize, Empire Company Limited, Shoprite Group, Tesco, and Woolworths Group — came together to announce a new global grocery retail venture capital (VC) fund, W23 Global

To demonstrate just how global of an effort this is, look at each company. Ahold Delhaize operates in the United States, Europe, and Indonesia and is behind brands like the Giant Company and Stop & Shop. Empire is headquartered in Canada and runs brands like Safeway and Sobey’s. Shoprite Group hails from Africa, with companies like Checkers, Freshmark, and Shoprite. Tesco is a United Kingdom brand that also operates in Europe. Last but not least, Woolworths Group runs out of Australia and New Zealand. 

Photo Courtesy GIANT

W23 Global is backed by $125 million in commitments from these retailers over the next five years.

Each brand is an equal funder and partner — contributing $25 million each — and each of their CEOs is on the investment committee. That committee will approve each investment that aims to benefit, for example, their supply chains or sustainability. 

Generally, the fund will invest in startups and scale-ups developing technology “to transform retail and create a better planet,” it claims on its website. According to an Ahold Delhaize news release, W23 Global will focus on three types of technologies. 

First, it sets its sights on customers, zeroing in on solutions streamlining and personalizing their experiences in stores and on the internet. Second, it will turn its attention to the broader scope of stakeholders, backing technologies that are building more efficient value chains. 

Finally, it aims to support the environment, emphasizing technologies that can improve the sustainability of the grocery sector, reducing emissions and waste while enhancing positive biodiversity impacts, traceability, and the number of healthy options.

W23 Global also aims to look beyond these early-stage companies to find entrepreneurs working on problems “not currently being adequately addressed.” 

The fund will be run by Ingrid Maes, the CEO and chief investment officer, who works for Woolworths Group, the biggest grocery retailer in Australia, although it is legally based in the United Kingdom. 

After identifying the problems that need solving, the fund will focus on “seeing if there are existing technologies and ideas that could be supported to develop more quickly,” Maes told NCA Newswire.

“It’s also about going to the startup community and saying, ‘Come up with new ideas that solve for the challenges we’ve identified, create a business around them, and we will invest to help you make your vision a reality.”

Photo Courtesy Woolworths

Maes is no stranger to this industry. She brings more than 25 years of experience working in Fast-Moving Consumer Goods (FMCG) and grocery. That includes five years at Coles Group before moving to Woolworths as director of loyalty, data, and digital media. In 2019, she took command of Woolworths’ domestic venture capital fund, W23 Australia, whose name inspired, and will share an office with the new global VC.  

The name of the domestic version of W23 was actually inspired by Woolworths’ group strategy for transformation, which currently includes Horizon 2 and Horizon 3. According to the Woolworths website, the focus of Horizon 1 in fiscal year (FY) 2022  was to establish best-in-class talent practices. FY23’s Horizon 2 aims to “embed our Employee Value Proposition,” and FY24’s Horizon 3 seeks to grow and develop leaders. 

In addition to sharing a name, the purpose behind W23 Global is not that different from that behind W23 Australia. Maes told the Australian Financial Review in 2020 that the domestic fund “aims to give entrepreneurs the freedom to continue doing what they do best while offering them access to the assets we can bring to the table to help them realize their plans more quickly.” In return, partnering with these innovators would help Woolworths “differentiate our offer and accelerate our ability to meet the changing needs of our customers.”

Likewise, the benefit for the burgeoning businesses and innovators selected to be part of the global fund is that W23 Global promises to help speed along the process of scaling globally before leaving “you to do what you do best: innovate and grow your business at startup speed.” 

“We’ll be there when founders need us but get out of the way when they don’t,” Maes explained to the Australian Financial Review this year.

These portfolio companies can enter deals with any customer, meaning they are not beholden to the companies behind W23.

However, being in the portfolio will obviously open up important doors and connections to them with giant brands that will serve not only as investors but also as advisors and possible customers. 

Brad Banducci, former CEO of Woolworths, also expects the benefits to be huge for the grocers. 

“Innovation is helping Woolworths Group create better, faster, and more personalized experiences for our customers while ensuring we always have what they need in-store and online,” he said in a statement. “It’s also fundamental to the great progress we’re making in minimizing our environmental footprint.” Vital to that innovation is the strategy of supporting entrepreneurs, “many of them in our own backyard of Australia and New Zealand.” 

Photo Courtesy Shoprite

The CEOs of the other W23 funders have expressed similar sentiments, especially Pieter Engelbrecht, CEO of South Africa-based Shoprite Group. In the company’s press release, he said that “in a country with one of the highest levels of inequality in the world, as measured by the Gini coefficient, we at the Shoprite Group have to find more affordable solutions for our customers to sustain their livelihoods, every day.” That need for innovation is exactly why the conglomerate joined W23 Global. 

If W23 Australia’s investments over the years are any indicator of what is to come for W23 Global, it’s going to be game-changing.

For example, the fund’s first $30 million investment was in Marley Spoon, a meal delivery service working with the Martha Stewart team to offer more than 100 recipes for customers to choose from every week. 

Its second investment was in Eucalyptus, which has connected men and women to remote healthcare through two separate platforms, Pilot and Kin. More recently, in 2022, it invested in All G Foods. The biotech startup that uses precision fermentation to make dairy proteins without animal or land use, creating plant-based protein products under the brand Love BUDS

That same year, it backed, a platform working to increase diversity and inclusion in hiring by providing a blind chat interview process. Woolworths had been using it for about a year when it invested. 

Photo Courtesy Marley Spoon

W23 Global also claims it complements the five brands’ “continuing direct innovation and investment strategies.” For example, in 2020, Tesco launched a $3.1 billion (£2.5 billion) revolving credit facility with interest tied to achieving environmental goals, followed by two more sustainability-linked bonds in 2021 with goals to cut Scope 1 and 2 emissions. 

Beyond emissions reduction efforts, each of these companies is also innovating independently in areas such as energy management, food waste, and plastic waste. For example, by the end of 2023, Woolworths had installed 231 solar systems in Australia and New Zealand. 

However, forming a united front under the W23 Global fund presents an opportunity for more impactful steps than any of these players could take on their own. Evan Walker, a portfolio manager at 36ONE Asset Management, took a zoomed-out look at the fund in a conversation with Eyewitness News. “This really is five big heavyweights around the world, looking to put all their ammo in one basket and obviously fire up some innovation.” 

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