SBD/September 28, 2011/Marketing and Sponsorship

Nike Sets Up Venture-Capital Offshoot To Fund Environmentally Focused Startups

Nike is “setting up a venture-capital offshoot called the Sustainable Business & Innovation Lab to back startups focused on alternative energies and more efficient approaches to manufacturing,” according to Kharif & Townsend of BLOOMBERG. Nike’s website notes that the lab will “seek out companies that promote healthy lifestyles.” The company is “counting on innovation to help it cope with the economic slump and supply constraints.” Nike declined to say how much money it will devote to the project. Nike Dir of Global Corporate Communications Mary Remuzzi said that the effort is “in its early stages and hasn’t made investments, which would need to be approved by management.” Remuzzi in an e-mail noted, “Leveraging innovation in sustainability can be a vehicle for growth.” Harvard Business School professor Shikhar Ghosh said that investors in 30-40% of cases “lose most or all the money they put into startups.” Investors 70-80% of the time “don’t get their projected rate of return.” The lab “will primarily make equity investments in young companies focused on alternative energies.” Nike’s website states that it will also “finance partnerships with government and nongovernment organizations.” Kharif & Townsend note Nike "may be able to make its products more cheaply,” and it also “helps the company appeal to environmentally minded customers.” Nike has “tapped venture-capital and private-equity managers to run the new operation, including Avi Sahi, who was hired last December after working at the buyout firm Perseus LLC.” John Hull, a “long-time venture capitalist, also is working as a partner.” Hull previously served as “managing director at Marquam Hill Capital LLC and Intel Corp.’s venture arm.” Nike’s website noted the company is “considering adding more staff to the effort” (BLOOMBERG BUSINESSWEEK, 9/28).
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