‘Quaking in Our Boots’: Kraft, Kellogg Join Pullback in Corporate Investment
Startup funding units of big businesses feel the sting of the economic downturn.
Photographer: Audun Bakke Andersen/Moment RF/Getty Images
In boom times many big companies turn themselves into venture capitalists, backing young enterprises in a bid to stay competitive or discover the next big thing. But when the economy slumps -- as it is now -- some corporations rethink their ties to startup funding, as the investment divisions of food giants Kellogg’s and Kraft Heinz show.
Though tech companies like Alphabet Inc. have well-entrenched corporate investment divisions, other firms may lack the same level of commitment to their venture arms, and as US recession signals mount, some are hesitant to keep funding money-draining bets while their sales and profits are shrinking. Any pullback in the current cycle would worsen an already subdued environment for financing new companies.