MINNEAPOLIS _ 301 Inc., the venture capital arm of General Mills, is investing in Purely Elizabeth, a Boulder, Colo.-based maker of granola, oatmeal, muesli and cereal that uses more nutrient-rich ingredients than a typical bowl of grains.
The $3 million investment is Purely Elizabeth's first funding round, and General Mills, headquartered in suburban Minneapolis, is the sole investor.
Granola is a popular product in the U.S. food startup scene, but 301 Inc. believes Purely Elizabeth offers unique ingredients, taste and leadership under chief executive and founder Elizabeth Stein.
"She was early to use chia seed and millet and some of these other novel grains as a part of her formulation, so she's always been on the leading edge," said John Haugen, vice president and general manager of 301 Inc. "It's nutrient-dense, but the reason people keep buying it is because it's delicious."
This is the eighth food startup that 301's has invested in since General Mills reset the division in fall 2015. Previously, the purpose of 301 Inc. was to develop cutting-edge product ideas in-house for General Mills. But, the company quickly realized it couldn't outcompete, on ideas and passion, the swell of food entrepreneurs across the nation.
301 now invests in early-stage food companies to help them grow market share and improve business fundamentals while General Mills gains a potential leg-up if the packaged food giant wanted to acquire the brand down the road.
"Purely Elizabeth is a brand I would love nothing more than to see grow, and to see some of these brands (that we have invested in) be a part of the General Mills portfolio," Haugen said.
Boulder has a reputation as a natural and organic food hub, with a history of attracting General Mills' attention. In 2008, General Mills acquired Boulder-based Larabar, a producer of snack bars made from fruits and nuts.
General Mills has a stable of products occupying Purely Elizabeth's food segment _ like Nature Valley granolas and muesli and Cascadian Farm granola cereals. Purely Elizabeth, which Stein started in 2009, resonates with consumers conscious of sourcing, food function and health with its gluten-free, vegan, organic and Non-GMO Project-verified ingredients.
"She's been running a pretty lean team so she'll be able to add some bench strength," Haugen said. "We will be able to help launch and scale the various granolas, but also launch the bars later this year."
The bars come in five flavors and will be made from grain granola as well as mushrooms.
Haugen, in previous interviews with the Star Tribune, has made it clear his team finds the "functional food" space _ industry parlance for foods providing some sort of health benefit _ particularly appealing from an investment standpoint.
The investment is "great validation", said Stein, in a release Monday. She added, the partnership "allows us to utilize the resources and support of General Mills to boost our new product development, furthering our mission to redefine the standards of packaged foods."
