Starbucks to Invest $100 Million in Venture Capital Sector


While it might be surprising for some to see giants in the food and drink business enter the venture capital arena, that is exactly what is happening. A number of companies, including giants such as Kellogg (NYSE: K) and General Mills (NYSE: GIS) have been contributing excess capital into this area, but today it appears that one of the largest coffee company’s will be jumping into this market as well.

Starbucks (NASDAQ: SBUX) announced today, alongside previously announced changes to their loyalty program as well as an accelerated stock buyback program, announced that it would begin investing in venture capital funds.

Starbucks has said that it would put $100 million into a fund run by Valor Equity Partners. The company hopes that putting money into these alternative investments could help see future returns as well as fund possible partners and vendors for Starbucks to work with. As such, it’s expected that much of this $100 million will be invested in food, drink, or retail start-ups, especially since Valor has a history of working with food-related startups.

“We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail, and our digital flywheel,” said Kevin Johnson, president and chief executive officer of Starbucks, in a statement. “At the same time, and with an eye toward accelerating our innovation agenda, we are inspired by, and want to support the creative, entrepreneurial businesses of tomorrow with whom we may explore commercial relationships down the road. This new partnership with Valor presents exciting opportunities, not only for these startups, but also for Starbucks, as we build an enduring company for decades to come.”

Starbucks is one of the more innovative food companies in the sector, embracing technological innovation an impressive rate including at one point dabbling in cryptocurrency payments for coffee.

Overall, shares of Starbucks have been steadily rising, increasing around 0.4 percent in today’s trading session as the stock is close to reaching a second record close this month and the eighth record this year. Earlier, Starbucks announced they were pursuing a $2 billion accelerated stock buyback program in an effort to strengthen existing shares.

Shares of the coffee company have increased 11.5 percent this year. While seemingly strong, in comparison to the S&P 500 for example, which rose 12.7 percent, the increase in the giant isn’t that spectacular, but still respectable considering the size of the company, which operates of 30,000 stores internationally.

Starbucks Company Profile

Through a global chain of almost 29,900 company-owned and licensed stores, Starbucks sells coffee, espresso, teas, cold blended beverages, food, and accessories. The company also distributes packaged and single-serve coffee, tea, juice, and pastries through its own stores, grocery store chains, and warehouse clubs under the Starbucks and Teavana brands under the Global Coffee Alliance partnership with Nestle.

In addition, Starbucks markets bottled beverages, ice creams, and liqueurs through various partnerships with Pepsi, Anheuser-Busch, Tingyi, and Arla. In fiscal 2018, the Americas segment (including the U.S.) represented 68% of total revenue, followed by the China-Asia Pacific segment (18%), channel development (9%), Europe-Middle East-Africa (4%), and corporate-other (1%). – Warrior Trading News