Coca-Cola Hopes Its Startup Incubator Is The Real Thing

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Suddenly major brands are looking to get into the startup funding game, whether we’re talking GE, Yammer or even non-tech brands like McDonald’s. Coca-Cola is another consumer brand looking for an edge by funding new startups. Coke isn’t doing it for pure investment purposes necessarily, but because they believe lean startups can give them the creativity, agility and speed to market they lack. Startups also put a fresh set of eyes on a problem. And even a company like Coke with more than 700K employees spread across nearly 200 countries needs that once in a while.

David Butler, VP of innovation at Coca-Cola told me his company has created a program called the Coca-Cola Founders Program to provide funds ranging from $1 to $1M, along with the resources of his company to help experienced entrepreneurs from around the world with cool ideas get off the ground.

Butler says it’s not a simple matter because often times large brands, no matter how good their intentions, don’t mix well with small startups, so it’s not as easy as saying you are going to provide some money. It takes work and commitment to experimentation to build a program like this and let it blossom without being overly controlling.

He says they have designed this model to work deeply with these startup teams starting with some seed money, then connecting them with a strategic advisor and key business units inside Coca-Cola. The hope is to nurture them to Series A funding and beyond.

The first group is truly international too with groups from Sydney, Buenos Aries, Bangalore, Tel Aviv, San Francisco, Rio de Janeiro and more. Once these entrepreneurs join the program, they get the benefit of funding and access to a range of resources that only an organization the size of Coca-Cola could provide. But unlike some branded starter accelerator programs, these startups maintain the rights to their own intellectual property, while Coca-Cola gets access to creative thinkers that they hope could help them in the long run.

In fact, Gian Martinez, one the members of the team from Rio says Coca-Cola is a partner, but they don’t own or even control their project. “We see them as an investor and client. Coke doesn’t say what we should do or how we should do it or [how we should] operate.” He adds, while the solution was born because of Coca-Cola’s help, it’s much bigger than Coca-Cola and so is his company’s ambition.

Much like corporate blogging at its best, this program is not about sales and marketing in the traditional sense, as much as an opportunity to expand the brand in interesting new ways. Butler recognizes these companies could sell the ideas they come up with to their competitors too. He seems comfortable with that because he says it’s authentic –a phrase you often hear when talking about corporate blogging or corporate involvement in social media. He stresses that these aren’t companies created by Coca-Cola for Coca-Cola. The company may benefit ultimately, but they don’t control these projects in any direct way (or at least that’s what they tell me). He does admit they could try to buy some of them at some point, but that’s not necessarily the intent.

As for the startups, they get access to Coca-Cola’s vast resources without selling out to them. That means they can access their media teams for publicity, their distribution arm if they need to learn logistics, their marketing clout to establish markets and the entire range of expertise across the organization–areas where startups often lack proficiency and scale. This type of access done correctly could be invaluable to early stage teams.

Martinez and his co-founder Wilton Neto have created an app called Winnin, a social tool for finding the best videos on the internet from YouTube, Vine, Vimeo, Facebook, Instagram and Vevo. They took advantage of the open APIs on these services to connect to them for free, then they created a game for people to vote for the best videos in a particular category, what they call “a battle.” People can create a battle with multiple videos from different services, and then the community votes on which one they believe is best. Winnin launched in Brazil, but hopes to expand into the U.S. soon, and Coca-Cola can certainly help them extend into to newer markets.

The reason this startup project appeals to Coke is that its target market is between 13 and 24, which is certainly a demographic that Coca-Cola and other brands want to access.  Since many young people aren’t watching traditional TV anymore, it could give Coca-Cola a creative advertising outlet to a key marketing demographic for a small initial investment.

“The problem is engaging with teens. How do you engage with them?” Martinez asked. “The beauty of the model is to find solutions for big problems. We found a solution Coke can benefit from and other brands can find it too.”

The program is actually part of a larger trend where companies recognize they need to digitally transform as an organization, something that’s difficult for large companies to do alone. That’s why they look externally for this type of creative thinking. As I wrote last week, big companies are building pockets of innovation in an effort to find new ways of reaching markets and solving entrenched problems. These types of efforts require a willingness to experiment with new ways of working.

Of course, as with any startup, no matter how creative the idea or how well established the brand partner, Butler recognizes there are no guarantees here, but he and the company think it’s a bet worth making.

“It’s authentic. It’s real. They could lose it, but that’s the way it goes,” Butler told me. He said it’s not about PR, it’s about creating something and seeing what happens.

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