Starbucks invests $100M in private equity fund; tests new coffee traceability app feature

(GeekWire Photo)

Starbucks is using a new method to invest in burgeoning technology.

The Seattle coffee giant for the first time is putting cash into a private equity fund, announcing on Wednesday a $100 million investment in the new Valor Siren Ventures Fund managed by Valor Equity Partners.

The Chicago-based firm makes growth-stage investments across various industries and in companies such as SpaceX, Bird, Tesla, and a number of food-related startups including Eatsa, Sizzling Platter, Wow Bao, and Roti Modern Mediterranean. The new fund, which could reach up to $400 million, will also go toward startups developing retail-related technologies.

“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,” Starbucks CEO Kevin Johnson said 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 CEO Kevin Johnson speaks at Wednesday’s shareholders meeting in Seattle. (GeekWire Photo / Taylor Soper)

Investing in a private equity fund is one strategy to back up-and-coming startups. Other tech giants use corporate VC arms, such as Microsoft’s M12 or Qualcomm Ventures, to do the same.

Starbucks has invested millions of dollars into new technologies over the past several years as it looks to increase store traffic and build “digital relationships” with customers. In December it expanded its delivery partnership with Uber and also recently opened up its mobile order-ahead app feature to anyone.

GeekWire is covering the company’s annual shareholders meeting this morning in Seattle, so stay tuned for updates.

Update: At the meeting, Johnson didn’t reveal more details about the investment, but said Starbucks may explore “commercial relationships” with companies in the fund’s portfolio. “This action reinforces our belief that innovative ideas are fuel for the future,” he added.

Tracing beans 

A Starbucks Roastery worker. (Starbucks Photo / Joshua Trujillo)

At the shareholders meeting, Starbucks will unveil a new feature it is testing as part of the company’s mobile app that lets customers scan a bag of coffee and trace their brew at various supply chain stages, from bean to cup. Information such as bean origins, farmer support efforts, roasting info, tasting notes, and more will be shown.

The feature is part of a pilot program that Starbucks announced last year when the company said it would work with farmers in Costa Rica, Colombia, and Rwanda, possibly using blockchain as part of the process.

Michelle Burns, senior vice president of Global Coffee Tea at Starbucks, told GeekWire that the company’s coffee has always been traceable, “but the next step is for us to uncover benefits of having the information tracked digitally and shown in real-time.”

Burns said that customers want to know more about where their coffee is coming from. But perhaps more importantly, the technology can empower workers at the 380,000-plus coffee bean farms where Starbucks sources its ingredients, she said.

“We can start to unlock opportunities for them that can help lead to their economic empowerment and visibility for where their coffee is going,” Burns said.

Delivery expansion

During the shareholders meeting on Wednesday, Starbucks COO Rosalind Brewer — who was recently named to Amazon’s board — talked briefly about the company’s delivery initiatives.

Starbucks now offers delivery in 12 countries, including China, Japan, Mexico, and the U.K. In the U.S., through a new partnership with UberEats, Starbucks delivers from almost 1,600 stores and seven major markets. Brewer said delivery will come “soon” in Seattle, as well as to the broader Bay Area market.

Starbucks previously ran delivery pilots with Postmates in Seattle four years ago, but the new deal with Uber its most aggressive delivery initiative in the U.S. to date. The company is exploring ways to reach customers as store traffic has been stagnant.

Other fast food companies such as McDonald’s and Taco Bell have invested in similar delivery partnerships in recent years.

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