Corporate Venture Arms: How Paulig’s PINC is Thriving Amid Challenges

In an increasingly challenging funding landscape, where numerous corporate venture arms have reduced investments or disappeared, Paulig’s PINC investment arm is choosing to double down.

Under the leadership of Marika King, PINC is structured to act swiftly and independently. Its mission is to invest in early-stage technologies that not only deliver impactful results but also offer a strategic advantage.

King points out that this unique structure allows PINC to test technologies not just within Paulig, but also across its extensive supplier network. This facilitates better feedback for founders and robust validations for the investment committee prior to making investments.

AgFunderNews (AFN) recently interviewed Marika King (MK) about the inception of PINC, its founder evaluation processes, and the critical nature of honest feedback in today’s investment world.

Origins and Structure of PINC

AFN: How did PINC get started?

MK: PINC was driven by two key motivations. First, the management at Paulig aimed to accelerate innovation within the core business. Second, the Paulig family expressed a desire to positively impact the planet and its people. While our strategy has evolved, we remain committed corporate impact investors focused on strategic impacts.

Investment Thesis and Strategy

AFN: What’s the investment thesis, and do portfolio companies need to connect to Paulig?

MK: We focus on agrifoodtech investments at pre-seed and seed stages. Some investments, like our initial investment in Kaffe Bueno, which upcycles coffee byproducts into high-value ingredients, align closely with Paulig’s core business. Others, such as our recent investment in Scindo, an AI platform for enzyme discovery, may initially lack direct relevance but show promise in broader strategic areas.

Role of PINC in Corporate Venture Capital

AFN: Why establish an investment arm instead of relying on open innovation?

MK: As Paulig lacks a dedicated open innovation team, PINC serves as a gateway for startups that may not receive direct investments but have relevance to our core business. Investment is a strong incentive for our core business to engage more actively with startups.

Long-term Perspective with Unique Structure

AFN: As a privately owned entity, does PINC have a longer-term horizon than publicly traded venture funds?

MK: Our investment structure allows for longer-term perspectives as we operate independently, reporting to a board through an investment committee. We can move quickly without needing unanimous agreement from corporate stakeholders. Testing technologies across not just Paulig but also suppliers gives us a significant competitive edge.

Investment Capacity and Geographic Focus

AFN: How much funding do you have available for investments?

MK: PINC operates from Paulig’s balance sheet with five-year mandates, setting us apart from traditional VCs that may have more rigid timelines. We’re targeting around three investments annually, with funds allocated for follow-on investments to support portfolio companies.

AFN: Where do you focus your investments geographically?

MK: Our primary focus is Europe, although we are open to investments outside the region if they align strategically with our goals.

The Current Funding Climate and Startups

AFN: How do corporates contribute in this challenging funding environment?

MK: Corporates recognize that the challenges we face are not going away; rather, they are escalating. Engaging with startups in pilot programs, acting as early customers, and investing helps validate and address these pressing issues.

AFN: Should startups be cautious about working with CVC funds?

MK: We’ve committed to being a professional investor that operates at arm’s length. This fosters trust between us and startups while also enhancing our appeal to other investors. We focus on supporting our portfolio companies without over-promising.

The Importance of Feedback in Investment

AFN: Should investors provide better feedback to startups they decide against?

MK: Providing clarity on rejection is essential, as it saves time for both parties. We strive to articulate the reasons behind our decisions, whether the issue lies with the stage of development or possibly the founding team.

Red Flags and Investment Decision Factors

AFN: What red flags do you look for during pitches?

MK: A lack of clarity around the problem being solved is a significant red flag. Additionally, many pitches fail to adequately cover the competitive landscape, which is crucial as customers always have alternatives.

Sustainability’s Role in Investment Decisions

AFN: How important is sustainability in your investment decisions?

MK: As an impact investor, sustainability, health, and food security are our core focus. Our goal is to discover business cases that offer strong value propositions irrespective of their sustainability angle.

Reflections on Agrifoodtech Investing

AFN: How would you describe the recent years in agrifoodtech investing?

MK: The availability of cheap capital led to some questionable investments, and while there is current hype around AI, we remain vigilant about the sustainability of our investments. The challenges we face aren’t going away, and we are dedicated to addressing them.

Learning and Collaboration in Investment

AFN: What have you learned about investing over the years?

MK: Collaboration with aligned investors is crucial. We need to be connected to discuss industry trends and share insights, especially as a small team.

AFN: Can you highlight an investment where collaboration was key?

MK: Our investment in BlueRedGold, which grows saffron indoors using automation, exemplifies this. Collaborating with other investors helped us navigate initial skepticism due to market size, ultimately leading to successful investment.

👉 Read more in our Investor Q&A series.