Former CEO of WeWork in Latin America, Claudia Woods assumed the presidency of BAT (British American Tobacco) Latam South in January last year with the mission of helping the company diversify its business beyond cigarettes. To this end, the executive is betting on acting even closer to startups. The company launched an investment and innovation hub in Brazil this month, with the aim of strengthening relationships with entrepreneurs, especially in sectors such as consumer goods and technology for retail.
The hub connects directly with BAT’s corporate venture capital arm, the global fund BTomorrow Ventures (BTV). Launched in 2020, the investment vehicle has already invested R$1.1 billion in 31 startups around the world – but still has around R$2.5 billion to be allocated. And Brazil is one of the markets that the company is targeting at the moment.
According to Claudia Woods, the expectation is that at least two new investments will be made in Brazilian startups this year.
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“There is a combination of two critical factors for this look at Brazil. The first is the Brazilian market, which has size and scale potential. The second is a mature innovation ecosystem, with entrepreneurs who have already created this shell of innovation, and which has stability, but with a shortage of capital, which leaves the market prepared for this construction journey”, says the executive.
Formerly Souza Cruz, BAT is going through a moment of transformation, with the goal that by 2035 more than 50% of its global revenue will be generated by new businesses other than tobacco. To this end, the company has made investments in startups from different sectors, with emphasis on the food and beverage sector.
Some examples are the North American More Labs (functional drinks), the Canadian Awake Chocolate (snacks), as well as Moment, a US functional drinks brand that has already received successive rounds of investment from the group. In Brazil, the fund has already invested in Mais Mu, a healthy snacks and supplements company.
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In addition to consumer goods, BTomorrow Ventures (BTV) also seeks companies that develop technology for retail. In this segment, a Brazilian investment by the fund was Uello, a logtech from São Paulo sold to Lojas Renner in 2022.
New methodology
The innovation hub was born with the mission of being more than a source of capital. BAT’s proposal is to offer startups access to its operational infrastructure – a network of 250,000 points of sale, manufacturing and logistics capacity, in addition to more than 120 years of knowledge in distribution and mass consumer marketing.
To formalize this value proposition, the company developed TFactor, a methodology created in partnership with the entrepreneurs of the invested startups, which maps the set of capabilities that BAT can provide in addition to capital. The idea is to reduce the gap between innovation and scale, the point where most startups tend to stumble.
“Although the fund is five years old, since I arrived, we started to delve deeper into the ways of working. In other words, how the company should relate to entrepreneurs. Our view of CVC is different from what is practiced in the market in general. Instead of wanting the company to grow in accordance with the company’s strategy, we want to offer the entrepreneur the strengths to support their needs”, points out Claudia.
In practice, the impact of the partnership can be seen in the case of Mais Mu. After receiving funding from BTomorrow Ventures, the startup jumped from 6,000 to more than 40,000 points of sale in just 18 months, supported by BAT’s distribution network.
Brazil, according to the executive, is not just an investment destination, but should act as a springboard for the international expansion of invested startups, taking advantage of BAT’s global footprint in more than 140 countries. The company already has cases of startups from abroad that are using the country as a gateway to Latin America, and will soon announce new names.
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Internally, the hub also plays a role in cultural transformation. BAT opened the space for the company’s employees, leaders and specialists to actively participate in the ecosystem, making internal knowledge available to investees.
“The core of this transformation is to ensure that priority and speed are given to the shift beyond tobacco. The hub is the main enabler for this to happen”, observes Claudia.
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