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story.lead_photo.caption The exterior of Tyson Foods Inc. headquarters in Springdale. - Photo by Anthony Reyes

For pending industry shake-ups, Tyson Foods says it has an ace in the hole.

As technology changes the food industry -- from the way people shop, the types of food they buy and the way food is processed -- Tyson is preparing to respond to competition with its venture capital investment group.

Tyson Ventures is the group responsible for the company's recent investments in alternative "meat" producers and smart-oven technologies.

Thomas Mastrobuoni, co-leader of Tyson Ventures, said the group has its eye on the startup companies that are making innovative products, developing new technologies or using new business models.

Mastrobuoni said the work is like being in the business of "kissing frogs -- not everyone's going to work out."

Businesses that create products from food waste or technology related to e-commerce are what Tyson and other food companies want. Tyson is looking to invest in new businesses that fit into focus areas like sustainability and what it calls the internet of food.

Ken Shea, Bloomberg Intelligence's senior food and beverage analyst, said its common for consumer packaged-goods companies to have investment groups. Campbell Soup Co. has Acre Venture Partners, Kellogg's has eighteen94 and General Mills has 301 Inc. All have similar goals and agendas.

Investment groups give food giants exposure to fast-growing companies without the companies getting their hands dirty, Shea said, "In case [there's] a shooting star that fizzles out."

Tyson Ventures, established December 2016, made its first splash in the same year by purchasing a 5 percent stake in California-based Beyond Meat. The company has since put its vegan burger patties, made of soy and pea protein, on TGI Fridays' menus nationwide.

Other Beyond Meat investors include Microsoft founder and billionaire Bill Gates, Twitter co-founders Biz Stone and Evan Williams, and actor Leonardo DiCaprio. Tyson made a larger investment in Beyond Meat last December.

The minority stake with each investment, Tyson spokesman Gary Mickelson said, can be as much as 20 percent.

Memphis Meats, a company that grows edible meat from animal cells, and Tovala, a steam oven manufacturer that also sells meals for consumers to prepare in the ovens, are the most recent investments by Tyson this year.

Springdale's Tyson, through its innovation lab, also has two partnerships with startups -- 1871 in Chicago, and Plug and Play in California's Silicon Valley -- that manage about 800 companies. Web-based applications like Dropbox, Soundcloud and PayPal have roots in companies like these.

In an email, an 1871 spokesman said the goal is to prepare its startups to meet with Tyson representatives to identify and address a particular challenge or opportunity.

While there are plenty of possibilities, Mastrobuoni said "I don't know what the next deal will be."

Mastrobuoni said there are startups experimenting with lab-grown leather and 3-D-printed fish, which could hold the key to addressing food waste and food deserts: urban areas that have little access to fresh food.

Tyson is also interested in companies experimenting with new advertising and revenue models; precision agriculture, also known as satellite farming; and technology for its thousands of chicken, beef and pork growers.

Tyson, Mastrobuoni said, would rather be engaged with entrepreneurs than sit back with its portfolio of products and commodities and not worry about the changes happening around them.

The motive for Tyson and other companies to invest in up-and-comers is both defensive and offensive, Shea said.

"You have to assume some are going to fail," Shea said. "But you only need one Amazon or Microsoft, and you're set."

SundayMonday Business on 03/04/2018

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