Forget sneakers, Nike has its eyes set on start-ups. The shoe-maker will set up a venture-capital fund called the Sustainable Business & Innovation Lab to fund start-ups focused on alternative energies and efficient-manufacturing technologies. Nike declined to provide how much money will go toward the project. No word on when it will begin making investments either.The move could help Nike identify new sectors and businesses to help lower costs. In the past, Nike has tried to find ways to cut expenses as costs for raw materials, labor, and transportation increased. “Leveraging innovation in sustainability can be a vehicle for growth,” says Mary Remuzzi, a Nike spokeswoman.
Until recently, it was most common for technology and pharmaceutical companies to start venture divisions. But with research budgets decreasing, a start-up might help replace that lost innovation, says John Taylor, head of research for the National Venture Capital Association, a trade group.
How much success can Nike expect? Well, in 30 or 40 percent of all investments, venture capitalists lost most or all the money, says Shikhar Ghosh, a Harvard Business School professor. And 70 to 80 percent of the time, investors don’t see their project returns.
Just do it, we say.
Read more at BusinessWeek.