After opening to much fanfare three years ago, Coca-Cola is shutting down The Founders program, according to a published report. Under this program, the company nurtured young startups, hoping to siphon some of that entrepreneurial energy and pass it along to the big lumbering corporation.
Over the last several years, companies have recognized the need to innovate, and the larger the company, the more difficult it is. David Butler, who, according to the report, has left the company, ran the program as VP of innovation. The company launched the program with the idea of giving startups with cool ideas some seed money — a million or less — along with access to the vast resources only a company the size of Coca-Cola could provide.
Butler would scout the startups, then connect the ones he liked with an advisor, who could help them navigate the big company. These types of programs have popped up at large companies over the last several years, including such well-known and varied brands as McDonalds, CVS, Fidelity and GE.
As Butler told me a couple of years ago at Web Summit in Dublin, when it works, the startup-corporation combination can be a powerful one: “Most large established companies have scale but lack agility. Startups have agility, but they’re looking for scale.” Put the two together and something beautiful could happen, or at least that was the hope.
While the idea was to create companies that would be independent and hopefully find other sources of funding (and customers), Coca-Cola was trying to gain something by bringing these startups into the fold.
The problem becomes giving the startup enough love without smothering it. A small company can’t always cater to the needs of its corporate benefactor, precisely because early stage startups by their nature lack the resources to take on too much too soon.
Butler told me earlier this year that the company liked to find startups, even before they formed. “We set up meetings with startups. We try to find founders before they develop and create the startup.” They would start with a thesis related to a big challenge or opportunity in the company. They established relationships with early-stage VCs and seed funders, typically talking to entrepreneur-in-residences, looking for that company that could help them before it launched.
Butler told me the company had funded 12 companies as of March when I last spoke to him. Among its biggest successes was Wonolo, an online staffing firm, which was funded early by Coca-Cola Founders, but has raised $7.9 million overall, including $5.7 million Series A in January.
Perhaps Butler was being prescient when he told me about the difficulties in pulling this off. “When the [startup and the corporation] combine, it’s quite interesting. You need a translator to help them understand what’s going on. That’s why a lot of platforms inside big companies fail and you have to take the time.” Unfortunately, the Founders platform appears to be no more, but the companies who have received funding will continue to receive internal support. They just won’t go looking for any more.
It’s hard to know if this is the start of a trend where companies back off this kind of corporate funding, or if Coca-Cola, whose CEO is stepping down, is just an isolated case of a company in transition.
Coca-Cola did not respond to requests for comments for this article.
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