Investor Spotlight: Luba Safran of Mondelēz SnackFutures Ventures — How Corporate Venture Capital Works and What It Means for CPG Founders

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1:18I love when a founder asks me what my doubts are. And I often will evaluate people based on how they respond to that. So if I'm telling you what my like two meta killer questions are, and I'm essentially telling you what my criteria for reinvestment is at the next round, if you poo-poo that, then it tells me one thing. Rather, if you're like, oh, wow, like, okay, let's discuss that. So I think founders asking investors what their doubts are and being ready to have an open conversation about the real, real doubts is a very, like, it's a growth opportunity for both parties that I really encourage.

1:56Hannah Dittman:Hey, everybody. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm joined by Luba Safran from Mondelez International's Snack Futures Ventures. Luba brings a unique lens at the intersection of corporate venture, food and beverage innovation, and tech enablement, backing brands and platforms that are shaping the future of how we discover, create, and consume snacks. She's got deep consumer experience and spent nearly a decade with AB InBev prior to Mondelez. At Snack Futures, she's focused on identifying breakout consumer brands and investing behind them, while also thinking deeply about how Snack Futures can truly partner with and accelerate emerging brands in Mondelez's core business focus areas.

2:37Hannah Dittman:In this episode, we get into how she thinks about trends today, where Mondelez is leaning in across categories and capabilities, and how the CPG investing landscape is evolving. We also break down what diligence actually looks like from the inside, how to show up to that first investor meeting in a way that stands out, and the biggest shifts happening in consumer behavior, brands, and investing right now. If you're fundraising, wanting to better understand corporate venture capital, or just trying to better understand how investors evaluate opportunities in today's market, this one is packed with actionable insight.

3:08Hannah Dittman:Enjoy!

3:13Hannah Dittman:Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah, and today I am so excited to be here with Luba Safran of Mondelize International Snack Future Ventures. Luba, welcome to the show. Thanks, Hannah. Good to be here. We're so excited to learn a little bit more about you and what you're doing over at Mondelize. If we could start out with a brief background of your career and the path that led you to Mondelize, that would be awesome. Absolutely. I wanted to be a marketer when I was growing up. And I did a bunch of years in B2B marketing, realized I wanted to be in consumer, went to business school at the University of Chicago Booth.

3:50And after business school, I joined AB InBev in their global innovation team, which was essentially making new products and brands around the world, made a bunch of ready-to-drink alcoholic beverages, visited a lot of countries. and InBev created a group called the Disruptive Growth Organization, which was designed to help. It was a trend at the time of large CPGs looking for new ways to grow. And the group was doing a combination of innovation, venture capital, and a bunch of other things. And they moved me into there. And I basically started doing corporate venture capital, grew through that experience, did that for seven years, and then joined Mondelez.

4:27I've been with Mondelez for two years in their corporate venture capital group. I lead everything deal-related for the team. and I'm excited to share more about it.

4:35Hannah Dittman:What an awesome career. And it sounds like you've had a lot of experience and reps with different brands in the food and bev space for sure. So it'll be a fun chat today. I'd love to learn a little bit more about Mondelez and Snack Future Ventures. Could you give us a firm overview so we can get an understanding of kind of the criteria stage, check size, mandate, and how you guys are operating? Absolutely. So Snack Futures Ventures is the corporate venture capital group of Mondelez. And what that means is that we're basically investing in outside companies on behalf of Mondelez, the parent company.

5:10For those who know corporate venture, every CVC is a little bit different. Everyone is a special snowflake. So our snowflake has a two-sided thesis. One side, which is probably less relevant for this audience, is that we invest in enabling technologies. We use that phrase, it's very broad, on purpose. But it's basically any kind of technology that would go under the hood of Mondelez and make us better, faster, stronger. And that can be anything, right? Like from quality assurance technologies, marketing technologies, manufacturing process can be really anything. So that's one side of our thesis.

5:43And then on the other side is we invest in snacks. That's why we're called Snack Futures Ventures. And for the snacks side, so we have primarily focused on the US and Europe to date, although we are interested in other geographies and are working to expand our geographic purview. We have a preference towards companies that are, let's say, solidly two digits in past 12-month revenues with some kind of a credible path to profitability. We don't usually track that to fundraising stage because I feel like stages can get very confusing and you can have six A's and then it doesn't mean anything anymore.

6:19And we are check size flexible, I would say. Our focus isn't really on the first check. It's more on the equity stake and making sure that the equity stake is meaningful to us without maybe being too aggressive for everyone. We are flexible on the rights that we take. And I would say overall, we try to come in in a way that makes sense for the portfolio company for ourselves, but also the other partners on the cap table. And with an eye to making sure that the company remains attractive going forward.

6:45Hannah Dittman:Super helpful context. And we have discussed a little bit of corporate venture capital on the podcast before, but I would love to get your perspective on the difference between corporate venture, CBC as you're calling it, traditional VC, and other type of investment institutional firms. So I always say that like once you understand VC, you more or less understand who you're talking to when you talk to any VC. If you understand the premise of CVC, you don't understand any CVC individual. You need to talk to each one to understand how they work. So I think each one is very specific in terms of like, does it only take money from its parent company or does it take money from other sources as well?

7:26Is it a strategic or a financial investor? And I can talk about more about that in a second. Is it trying to return a fund? Does it have a fund? like what does it owe to its stakeholders? What does the CEO want out of this? There are like a lot of questions and those answers are usually different in every CBC. Certainly in CPG, I think there's a lot of variability for CPG. CBC is maybe less so in tech CDCs. And yeah, I think one of the key differences between CBC and at least traditional VC is traditional VC, the goal is to make money. It's a very straightforward ambition. And for CBCs, some of them, that's also their goal.

7:59And usually that's like a baseline goal. But some who describe themselves as strategic, they have some other reason that they've decided to spend their money this way instead of like marketing their biggest brands, which is what they otherwise be doing with this money. And I think it's super important to always understand if you're talking to a strategic or financial CVC, and if you're talking to a strategic CVC, what does strategic mean to them? Because there is a lot of variability in that, and that can matter a lot for the startup founder in terms of the dynamics of both a first conversation and ultimately like does this partnership make sense so that's the differences between cvc and vc i think also in a down cycle cvc has an ability to participate often in ways that maybe traditional vcs will feel hesitant to because the money in a cvc is often coming from a giant international conglomerate who their fortunes are on a different cycle than like a traditional vc cycle so i think that's certainly an advantage in dealing with cvcs and then growth in private equity and other funders, I find confusing at this stage in terms of what even counts as growth.

9:02I was talking to someone the other day who is running a growth fund and they're writing Series A checks for$5 million. So I would like to listen to a podcast episode that explains that to me because I feel like I no longer understand how that's coming to bear in CPG. I think maybe it's evolving a bit today.

9:18Hannah Dittman:I totally agree. First of all, really helpful way you laid out some questions or food for thought that founders might want to have in the back of their mind and kind of peek behind the curtain of CBC to understand who they're dialoguing with or what they're really going after. So really helpful there. And agree, I think there's been a lot of kind of blurred lines when it comes to stage focus and CPG investing in general. There's been so much change post-COVID and kind of going through all of that. It's an evolving industry. And yeah, I've seen a lot of fun shifts as well, either early going a little later, later trying to lean in a little early.

9:56Hannah Dittman:I feel like everyone is starting to converge a little bit more at the middle where I guess they would describe brands having like proven traction and kind of ready to make the flip. Everyone is kind of waiting to get those brands right on the cusp of popping without leaning in too early or playing a little too late where the check sizes are going to be big. Obviously, there are funds out there who are like in their power lane and like very clear about being on a different end of the spectrum. But yeah, I definitely have noticed a little bit more of a messy middle as well happening too. We're definitely in the convergence space.

10:30And I think for the same reasons as everyone else, right, which is you want to have like de-risked, but still have meaningful upside. And I think that's actually a messy middle is really hard for founders today, right? Because like, particularly on the early stage, I think it has gotten a little bit empty in terms of people who are willing to fund CPG early. Like I know three guys who are doing that. But anytime I get something really early, I send it to those three and they're like, we already saw it. So, yeah, I think that messy middle is where everyone more or less is coming to. And I wonder if it will expand back out more because I think it would be a more vibrant space if it did.

11:03Hannah Dittman:Yeah. And thank you for your perspective from like the founder perspective as well, because it's so true. It is a tough spot for founders to be in. And I think, yeah, industries evolve and change. And I think it's hard to think about investing that way because it's such a black box for a lot of founders. And also it just seems like this very like static, institutional, like professional suit kind of environment. But there's trends in every industry. And obviously whatever's happening with the consumers first trickle out and out and out and ultimately to investors or even further out to their LPs as well.

11:38Hannah Dittman:So excited to kind of dig into a little bit more thought leadership. maybe I'll pivot into trends more broadly. How do trends affect your sector focus, especially coming from a CVC that has its own kind of history and heritage within certain categories? How do you all think about consumer trends or shifts or categories of interest? So I think we're lucky because we are part of a large organization that has a lot of people whose full-time jobs it is to figure out what is a meaningful trend versus what is a passing fad, which I think is kind of always the underlying question of trends is like, is it going to matter?

12:12And how long is it going to matter for? I think it tends to matter a lot if it's on the scale of mega trend. So Mondelez for many years has been publishing a state of snacking sort of trends radar. And it describes a lot of things that honestly play out across CPG or certainly across food, things like aging population, like all kinds of better for you, very mega level things. I think they impact us a lot in that if it's not a trend, if it's real, If it's a real thing that's really happening in the market, it drives the solutions that people want to create. It drives the companies that people start and found, which drives what comes to me inbound as an opportunity to invest in.

12:51Then the main question is, has that trend push on the supply side of companies matched a trend push on the demand side with consumers? Is it mainstream enough that people also know that these problems exist and solutions exist, and then they're going and looking to pay for a solution to this problem? Sometimes we see companies where like the founder is very leading edge and ahead of the curve and all of these things. And so there may be four years ahead on a trend curve popping and the trend will be real and it will be meaningful. But it isn't yet today, maybe at the scale that would make sense for us.

13:25And I think that's a very tough tension point. In Bev, we looked at a bunch of mushroom beverages and I remember like that's never going to be big, like ever, ever. it's not possible. And it's like, well, first of all, those companies still exist. And definitely not everyone thought they would, but they do. So they like have lasted eight years longer than anyone thought. And they're$200 million businesses. That was not obvious, you know, a decade ago or whatever. So I think the trends matter. It's making sure that the supply matches the demand if you're a founder and then finding investors who match where you are on that like trend growth curve, because we might look later towards mainstream or maturity adoption of a trend, but there are certainly people who go earlier.

14:08Hannah Dittman:In VC, there's kind of a lot of talk about problems, solution, trend waves like you're talking about, consumer behavior shifts, a lot of these things. Are you ever investing outside of something like that where it's not so novel maybe sounding or thesis driven in a way, I guess I would say? So this is one of my favorite provocations that you've just raised of like, does it have to be so cutting edge? Does it have to be disruptive? Because that's the word that gets used a lot in my universe is like disruptive, disruptive, disruptive. I'm a big fan of a non-disruptive, not sexy, profitable growing business.

14:48And I think that like there's always been the business model of a better mousetrap, right? Like a known thing that people have already experienced and they like it, but there's X problem with it. If you come with that same thing, but you've solved X problem, you will pick up possibly a decent number of consumers is if you've got the product price right. And that's not disruptive. That's just a better mousetrap. I love a better mousetrap. And I think for CPG in particular, which is the bulk of it is a mainstream business, that is a very reasonable path to take to getting like mainstream sales. So yes, it doesn't have to be so ahead of treads.

15:21It doesn't have to be so forward thinking. But I think there's even there, there's a convergence on what better mousetrap looks like, which is often the better mousetrap is better because it's delivering on something that is a mega trend that is like now consumers require XYZ to be different about this product that they loved before.

15:37Hannah Dittman:Yeah, I think those are great points. I love the way you're kind of frameworking it and labeling it to make it easy to understand. And I agree. I think it's easy to kind of get distracted almost by like the sexiness of something feeling brand new. And I think as an early, earlier stage investor, like a venture capitalist, that's a part of your job, right? It's seeing around the corner. You don't always have like a bunch of data to go off of. And you're thinking the way your investing style is working is you're looking for big, big, big hits. And maybe there are some like smaller losses and you're having a higher volume of investments.

16:13Hannah Dittman:The later you go down the stage spectrum, the less appetite for a failure, quote unquote, or higher risk exists because check sizes are bigger. The amount of fund you're allocating to a certain deal is bigger. The deal sizes or the deal numbers you're doing are far fewer. And so it makes sense, I guess, that on the earlier stage, it's easy to get excited and get conviction in something that sounds a little bit more cutting edge. because what else are you going to get a ton of belief in maybe if you don't have like a really strong story to tell? But I love the way you describe mousetrap because I think for the founders out there that maybe don't have as disruptive or novel of a concept and they are earlier stage, explaining it in those terms still allows them to kind of have that problem solution narrative and explain it to investors in a way that hopefully also gets them really excited about what they're doing.

17:08I do genuinely think that like when we talk about venture and CPG, that we should talk about the differences between venture and CPG and, for example, venture and tech. And I think it's tech that has made us all think that things need to be disruptive, etc. The financial fundamentals of investing in tech are different than in CPG. You will not get the returns that you get in tech and you won't get them because in tech, they're making things that have never existed before often. And it is totally disruptive. Right. But like, how often are you going to get the food equivalent of an iPhone? Very rarely.

17:40And to be honest, it may not be needed, right? Like, food is a very basic human need. And I think it is actually genuinely harder to make the iPhone in food and beverage, less so maybe in other parts of CPG. But certainly in food and beverage, like, yeah, it's okay to just have taken something that exists and made it better if that was something that people wanted.

18:01Hannah Dittman:Great point, Luba. And I think kind of hearkening back to the earlier part of our conversation, that's a trend shift that we've seen in kind of investor mindsets and approach in the industry. I think at the infancy of early stage CPG investing, it was tech funds leaning in because there was a gap in the market for early stage deals. People were doing later stage consumer deals. They weren't really leaning in early and tech investors kind of forayed and thought, hey, there's this whole other segment. Maybe we're doing early stage investments. Maybe we'll trickle over there. I think a lot of them didn't really realize that just because you're selling something online doesn't mean you can really like apply tech fundamentals and CPG has its own business fundamentals.

18:46Hannah Dittman:I think a lot of people learn that the hard way. I think LPs kind of felt the shock system of that and then kind of pushed funds to adjust and adapt. And then I think, yeah, there has been some early stage CPG companies that have modeled themselves off of tech a little bit and also learned the hard way. There's been a lot of learnings. this is actually a relatively nascent investing industry. I mean, tech as well. So it's not like rinse and repeat all the way. I think another kind of investment trend, if we want to go down this rabbit hole that we're also seeing is kind of this grappling with growth versus profitability.

19:21Hannah Dittman:I think the burn of investing and pouring money into high growth VC style, quote unquote, like big hockey stick growth dreams and then realizing how important profitability and cash is in a CPG business has kind of pendulum swing the focus the other way. And now it's like, be profitable. And that's really important. But growth is still important. You know, there's a lot of different things going on in the investment landscape. Investors are learning. Founders are learning at the same time, too. And I think for founders, I don't know if you have any advice you'd want to share about how they can kind of navigate thinking about some of these things.

19:56Hannah Dittman:But it would be great to understand, you know, given that there's some flux and changes, how can founders digest a lot of what's happening and keep it in the back of their minds as they're trying to navigate a fundraising process throughout these times? So I'll address what you said first, which is, yes, for sure, this is like still a nascent investment space. And I think what's interesting when I look at other markets outside of the U.S. is that this is so mature as an invested space compared to other countries where there is not necessarily really like any consumer focused funds or maybe there's like three consumer focused funds.

20:30And that's like a very broad interpretation of what consumer means. So it is very nascent in the US and yet we are leaders at the same time. And I think that's a very interesting dynamic. To answer your other point of what advice to give to founders. So I think there's no like right answer to this. Right. But I think particularly on the profitability versus growth thing, it's such a pendulum trend. It's hard for me to even like be serious about one side or the other. So my feeling is always like, what would you have done if you had paid for this whole business yourself? If you had bootstrapped this yourself, you would have made decisions about growth versus profitability as you went along constrained by finances.

21:10And those things would have traded off right as you hedged forward. And maybe one year it's more of a growth year and one year it's more of a profitability year. But it's all like rational and based on whatever the circumstances were at the time. That's my approach is like act as if you are the only owner and this was all of your money. What would you be doing with it? And as long as you're doing that, then you have an explanation of why, then that's the best you can do. Right. And maybe that was wrong, but that was the best that you can do. I find that to be a safer space in a way that like you have a proactive thing to say to your board instead of waiting for your board to pressure you to say like now we need growth or now we need profitability and probably alternates here by here.

21:47Hannah Dittman:Great points. And I think a really thoughtful perspective on navigating business in general. I think like the founders that have a lot of ownership mentality and responsibility and cash diligence, financial discipline, those are amazing traits in founders. And that's one way that it'll come across is making strategic decisions and not just feeling like, oh, well, this isn't my money. So light it on fire. But that being said, you know, we're talking about growth and profitability and what you need to see as an investor too. How does the diligence process go in CBC? Is it very similar to the rest of investing?

22:23Hannah Dittman:And kind of what are the key pillars of diligence that you're looking for or the key buckets that you're analyzing and the narrative and metrics within them that you're really hoping to see to get conviction in a deal? So I think that since every corporate venture capital group is special snowflake, I think at least within CBC, probably each process is somewhat different. And probably a lot of that depends on whether the fund is inside the corporate parent or outside of the corporate parent and what the like agreement or arrangement has been with the corporate parent. I say that because to be honest, a lot of the steps between me meeting someone, like me meeting a company and getting a deal approved are stakeholder management related steps.