The professional beer company OB Beer has been struggling with how to utilize the beer by-products (brewer’s grain left over after removing sugar and starch to make beer, yeast, etc.) which more than 30 tons are made per year. Beer by-products can be used to make food. It is low in calorie and high in nutrition. Recently, regulations have been eased so that products can be made from beer by-products. If this problem is solved well, it could become an exemplary case of ESG (environmental, social and governance) management. But, there were no ideas.
OB referred to the “100 Accelerator Program” of parent company AB InBev’s open innovation (company making attempts to innovate by making technology or products with external companies by disclosing internal resources). This is a support program that discovers startups with sustainable management and eco-friendly technologies and ideas and help them to become companies that can last 100 years. However, it took a long time to introduce it to Korea.
Tired of waiting, OB Beer visited the “Global Startup Meetup” in Seoul Startup Hub (SBA). It is a competition stage for startups armed with fresh ideas and solid skills. Fifty startups participated, and eight companies remained after evaluation.
SBA Part Head Cho Su-jin and RE:Harvest CEO Min Myoung-joon and OB Beer manager in a meeting (second from left) It was the startup RE:Harvest CEO Min’s turn to give presentation. The product presented by RE:Harvest was an energy bar made from beer by-product. The taste is similar to other energy bars out under market, but it has much lower calories and preserves most of the nutrients from raw materials such as barley and wheat. CEO Min introduced RE:Harvest as a “food upcycling” company that has the food by-product recycling technology which has grown to 49 trillion won in 2019 and is considered an exemplary ESG example abroad.
As soon as CEO Min’s presentation began, OB Beer CV manager thought this was the startup it must work with. The executives of OB Beer unanimously agreed to have RE:Harvest as their partner.
Startups come up with ideas and develop technologies, and large corporations use their internal resources to lead them. SBA provides a solid link between startups and large companies. Synergy is created naturally. This is the moment of the birth of first successful case which SBA had dreamed of, shared growth model between large companies and startups.
The relationship among OB Beer, RE:Harvest, and SBA is still strong even after two years.
OB Beer recalled at the screening process that RE:Harvest scratched the itchy spot, quoting, “I thought of 10, but it showed more than that.” OB Beer wanted an eco-friendly and sustainable growth solution along with innovation, and it met RE:Harvest and created a model ESG case.
Collaboration between large corporations and startups sometimes leads to catastrophe. There are many cases where large companies with money steal technology, talent, and patents from startups. OB Beer emphasized that it never had equity investment or acquisition in mind in the first place. It had looked forward to collaboration with startups and open innovation. It also announced that it would create a sustainability management team as a new business division within the purchasing team and hold a meetup startup every year to create more startups and more ESG cases.
RE:Harvest’s food upcycling / Courtesy of RE:HarvestCEO Min Myoung-joon also gave a thumb up, saying that it grew thanks to OB Beer and SBA. CEO Min had experience in consulting and food startup, and had gone through many difficulties in the beginning. It was fun and rewarding to set up a food upcycling company, but funding and commercialization were the obstacles he had to overcome.
That’s when SBA that reached out to CEO Min and helped him. SBA provided funding for commercialization and space to RE:Harvest and also blocked unreasonable requests from companies that are investing. He said that he saw SBA as a reliable partner that served as a buffer between large companies and startups, and that he was able to talk about problems he had.
He said he is very fortunate that a large company like OB Beer that shares the same value is his partner. As he talked to the OB Beer staff, he felt that OB Beer had been thinking about eco-friendly management even before ESG emerged, and it was looking at RE:Harvest as not only invest material, but as a partner.
SBA Part Head Choi had felt sorry for the startup support programs in the past. The discovering and meetup went well, but the management and support after that was poor. As a result, she has seen many cases of promising startups disappearing. What Choi thought of was a model of real cooperation between large companies and startups, a model of mutual growth rather than growth on one direction.
To create this model, she first listened to the difficulties of startups. What was needed most was funding, especially to bring the initial idea to life. After a startup discusses business with a large company, there were often cases where the collaboration failed because there was no money to make products. Therefore, large companies are hesitant to invest. They sometimes request only for technology.
Choi pondered what SBA could do between large companies and startups to help. So, after discussing with large companies first, SBA came up with a model that protects the startup’s technology and helps grow together. It is the responsibility of SBA to provide a work space for startups and lead meetings with the media and investors. The first example is OB Beer and RE:Harvest.
Choi still remembers the first time she met CEO Min. She was touched by the positive attitude and enthusiasm of RE:Harvest, so she provided everything SBA had. That was when RE:Harvest met OB Beer, the company that was considering open innovation. It was the right decision to connect OB Beer that was serious about ESG business, and CEO Min, who was actively involved in the ESG business by showing around the factory and asking for opinions.
RE:Energy bar made by collaboration of OB Beer, RE:Harvest, and SBA / Courtesy of RE:HarvestOB Beer, RE:Harvest, and SBA are still sharing ideas with each other. The beer by-product by RE:Harvest can replace flour. In addition to energy bars, pizza dough, noodles, and cookies can also be made with it. However, it has fewer calories than wheat and is rich in nutrients including dietary fiber. The production cost is also low as it processes and commercializes beer by-products that have been disposed so far.
CEO Min says the goal is to supply RE:Harvest products to all food sectors that use wheat flour. Here, he also expressed his ambition to continue making good cases with OB Beer, a good partner with a 30% market share of the world beer, and SBA that has always been supportive.
On the other hand, the Seoul Metropolitan Government, the operating organization of SBA, supports startup technology commercialization through “open innovation” between large global companies and innovative startups
so that promising companies can grow into unicorns and create a virtuous circle in the startup ecosystem. As the hub of Asia’s technological innovation, “Seoul” has been gaining distinguished attention as a global start-up city for its high R&D capacity, high patent applications, active investment of Seoul Metropolitan Government in new industries such as AI, fin-tech, and life sciences, and support for the start-up ecosystem.
Within the promotion of start-ups in the technology sector, Seoul Metropolitan Government, Maekyung Media Group and Seoul Startup Hub joined forces to organize an on/offline global startup festival for start-ups from all over the world from September 15 through 17 under the name of ‘Try Everything’, which aims to share scale-up insight and to attract start-ups in the tech sector to make appointments with potentially interested investors.”