7-Eleven has launched a venture capital arm with the purpose of making small investments in early-stage companies in the retail and food spaces.
News of the investment subsidiary came after Belly, the Chicago-based customer loyalty and marketing platform, announced that 7-Ventures was a participant in its new round of VC funding that raised $12.1 million. Other new investors included New Enterprise Associates, Andreessen Horowitz, DAG Ventures, Lightbank and Cisco Systems (CSCO).
The first investment for 7-Ventures, launched earlier this summer, was an undisclosed coffee company as part of 7-Eleven's efforts to improve its fresh food and beverage business.
"The reason for 7-Ventures is to go and find products and services in food and beverage, and new technology and business models that change how people interact with retailers and apply that back to the core business and corporate strategy," Raja Doddala, 7-Eleven's former business development executive who is heading 7-Ventures, told The Dallas Morning News.
Another "obvious benefit," he told Upstart Business Journal, is using 7-Eleven stores to test startup ideas.
The new business also builds on other efforts to support start-ups, such as 7-Eleven's recent effort to supply marketing and other support to lottery tracking mobile app, YooLotto.
A pilot program in 7-Eleven stores in the Chicago market led to 7-Ventures' second investment in Belly, which allows customers to accumulate loyalty points from multiple merchants on a single card or mobile-phone app. Mr. Doddala told CNN Money, "Belly offers digital loyalty networks, and we want to learn how networks work as opposed to retailer-specific loyalty plans."
7-Eleven joins the growing number of large corporations with venture capital funds, including Google, Intel and Samsung, amid a decline in traditional venture capital investments.
"It's a great marriage," Patty Burke, a founder and partner at Corporate Venture Agility, told The Dallas Morning News. "Corporate provides all the resources, knowledge and distribution, and the entrepreneurs provide the ideas, new technology and that agility to bring something to market quickly."
7-Ventures doesn't yet have a target of planned investments per year or even major return expectations.
"Obviously we want to make money on these deals but that is not the primary goal," Mr. Doddala told Upstart Business Journal. "To learn…that's the motivation."
In the retail space, Target, Nordstrom, Staples, Home Depot and others have opened labs to support innovation internally but also work with major and emerging technology players. Walmart has acquired several startups since establishing @WalmartLabs in 2011.
Generally speaking, do you see more risk or benefit for retailers getting involved in venture capital funds?