Kellogg’s investment fund has placed a bet on food startup Kuli Kuli, the first investment by the Big Food company’s VC arm since it was launched last year.
On Wednesday, the maker of Rice Krispies, Pop-Tarts and Frosted Flakes said the VC arm, known as eighteen94 capital, led a $4.25 million Series A funding of Kuli Kuli along with additional institutional investors InvestEco and S2G Ventures. Kuli Kuli is a relatively new startup that sells herbal teas, powders that can be used in smoothies and “superfood” bars that are all moringa-based products.
Moringa is a plant protein that is produced by trees that are grown in semiarid and tropical regions of the world. The leaves, pods and oils of those plants are a source of iron, calcium and Vitamin A.
“By investing in Kuli Kuli and helping them grow, we’re backing a new superfood category, one in which we see the potential for ongoing high-growth,” said Simon Burton, managing director of eighteen94 capital. Burton is now a member of the Kuli Kuli board of directors with the investment.
Kellogg’s (K) VC arm initially debuted last year, as the cereal maker said it was aiming to invest directly in promising entrepreneurs and ventures at a time when consumers are increasingly giving startup brands a try when they go to the local grocery store. With the biggest brands from Big Food manufacturers seeing sales often stall or slow down, those companies are aiming to invest in startups that are helping popularize new categories of food. Kellogg’s eighteen94 capital has vowed to invest about $100 million into startups that are pioneering new ingredients, foods and packaging.
Plant-based proteins are one of those categories. A number of startups in that world have gained the attention of Big Food makers, including Kite Hill, which makes cheese and yogurt from nuts, and plant-based burger maker Beyond Meat.
To participate in those trends, Big Food makers have launched VC funds to place relatively small bets. Rivals including Campbell Soup (CPB), General Mills (GIS) and Tyson Foods (TSN) have all launched VC funds under a variety of formats. Often times if the brand is performing well, a full takeover can occur later. That happened recently when PepsiCo (PEP) bought probiotic drink maker KeVita for around $200 million and Dr Pepper Snapple (DPS) paid $1.7 billion for antioxidant beverage maker Bai Brands. Both of those soda companies had already secured initial investments in those smaller brands.
Based in Oakland, Calif., Kuli Kuli was co-founded by Lisa Curtis, a Peace Corps volunteer in Niger who first tasted moringa when she was working abroad. She says she founded Kuli Kuli to help West Africans use more moringa locally, as well as sell some of their harvest to the U.S. via products like Moringa Green Energy shots and Energizing Moringa Herbal Tea. Kuli Kuli was initially launched through a crowdfunding campaign that raised $53,000, with a second campaign raising $100,000.
Kuli Kuli products are already stocked in over 2,000 stores, including Whole Foods (WFM) , Safeway and Sprouts Farmers Market (SFM).