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Coca-Cola is saying goodbye to its start-up incubator

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By Natalie Mortimer | N/A

January 5, 2017 | 4 min read

Coca-Cola is closing the doors on its five-year-old tech incubator, a move that will see the drinks giant cease funding to new start-ups to concentrate on innovation within its core drinks business.

Created in 2012 to help The Coca-Cola Company develop a “repeatable and scalable model for disruptive innovation,” the Founders’ portfolio of start-ups helped generate over 3x ROI for Coke over the past two and a half years. However, the drinks company is now dissolving the unit that led to the creation of successful startups Wonolo, an on-demand staffing company, and Weex, a mobile network for millenials.

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Coca-cola start-ups

Coca-Cola is saying goodbye to its start-up incubator

Coca-Cola said that it will merge companies already funded through the Founders into other areas of the business and will continue to work with startups via its Venturing and Emerging Brands (VEB) unit.

“We are focusing our marketing innovation resources primarily around core innovation projects within our beverage portfolio,” said a Coca-Cola spokesperson. “Relationships with the start-up companies already funded through the platform will transition to be managed through our corporate mergers and acquisitions team. These startups continue to generate benefit to the company. We will not, however, fund new start-ups or conduct additional funding through Founders.

“This does not change our holistic approach to innovation at Coca-Cola, which is to imbed innovation across our functions and throughout our global business units. We also continue to work with entrepreneurial start-ups through our Bridge program and ongoing investments via VEB.”

While many brands and agencies have realized the value of startups in recent years and stepped in to create their own incubators (Unilever, Pernod Ricard and John Lewis to name a few) Coca-Cola isn’t the first to turn its back on funding start-ups through a dedicated unit. In August last year Ogilvy Group UK shut the doors to Ogilvy Labs just months after Ogilvy’s worldwide executive director and EMEA chairman, Paul O’Donnell, warned the agency would reduce its investment in the UK if the country voted to leave Europe, which it subsequently did.

In an interview with The Drum last year Alex Dunsdon, a former M&C Saatchi business development director, who now runs The Bakery, an Oystercatchers-style intermediary for agencies looking to work with startups, said agencies should instead conduct lots of ‘minimum viable trials’ at around £5,000-£10,000 a time, then commit to the most successful. “

If you could put up a budget of a million quid for innovation, you could do a hundred trials at least of technology and then scale the winners at low risk. That way, you have automatically embedded this culture of innovation because everybody knows it’s part of their job to take small risks.”

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