301 Inc., the venture business of General Mills, has invested in GoodBelly Probiotics, a brand of foods aimed at improving gut health.
GoodBelly, owned by Boulder, Colo.-based NextFoods Inc., is among the largest of the 10 investments in 301 Inc.'s three-year history — and the arrangement between the firms is somewhat different.
As the lead investor in this funding round, 301 gave a "significant majority" of the $12 million that will help the company grow its national sales and innovation efforts, said John Haugen, vice president and general manager of 301 Inc.
GoodBelly is more established than many of the early-stage companies in which 301 has invested. GoodBelly and General Mills recently worked together to create a probiotic snack bar, the first nonbeverage GoodBelly product. It hit store shelves earlier this year.
General Mills licenses the GoodBelly name, bringing its snacking prowess to the bar's development, while the leaders at GoodBelly ensured the bar met its standards for delivering probiotics to consumers.
Haugen said 301 is committed to probiotics, which are "good bacteria" that can aid digestion and gastrointestinal function.
"We love the brand," Haugen said. "Behind the nifty brand is a team very much dedicated to the science."
The makers of GoodBelly weren't looking for investors when they first partnered with General Mills, but the explosion in popularity of probiotic-rich food products is making the market increasingly competitive.
"Standing still is probably the most dangerous place to be [as an emerging brand]," Haugen said. "As we spoke to them and saw continued evolution of the marketplace, we decided it was imperative we move quickly."
GoodBelly is taking on the outside investment to help accelerate product innovation and distribution — something megafood company General Mills can help with — in order to maintain a competitive edge.
"With this partnership, we look forward to driving new product innovation as well as expanding our team to reach new consumers," said NextFoods CEO Alan Murray, in a release.
Haugen said he believes this partnership, a by-product of its collaboration of the probiotic bar, is set up for long-term success.
"We have a lot to prove in the short- and midterm, but we definitely believe there could be a long-term opportunity here," he said.
301's goal is to find acquisition targets for General Mills, but so far it has made only investments, targeting firms that include Kite Hill, a maker of dairy alternative products; Farmhouse Culture, a probiotics specialist; and Urban Remedy, a maker of organic ready-to-eat meals.