Btomorrow Ventures launches £200m second fund to move parent beyond nicotine

Btomorrow Ventures (BTV), the corporate VC unit of tobacco products producer British American Tobacco (BAT), has launched a second fund to invest in what it calls wellbeing and stimulation.

With £200m ($254m) in committed capital, the fund will be used to help its parent company in its transition beyond nicotine products, with a stated objective of building a “smokeless world” as tobacco continues to lose its appeal through much of the world. The investment focus will be similar to its first £150m fund, in functional foods, beverages, and other technology that bring some form of health or functional benefit to consumers, as well as play a role in their daily routines instead of nicotine products.

The second fund will target larger investments in later stage startups with potential higher valuations. “What’s exciting about Fund II is that it is bigger than Fund I,” says Peter Wozny, senior legal counsel and communication lead at BTV. “Our mandate is also to invest in higher revenue generating startups, so looking more at series B and series C rounds. They will end up being potential acquisition targets in a quicker time than the original investments that we made three to four years ago.”

Most of the money from Fund I has either been invested or committed, and the leftover cash has been ringfenced for investments in the corporate, across operations, R&D, sustainability and digitisation.

BTV’s portfolio includes companies such as caffeinated chocolate producer Awake, adaptogen-filled beverage maker Moment, as well as supply chain technology company ClearMetal and bioplastics producer FlexSea. It has already made the first investment from Fund II in Hopwtr, a maker of sparkling water with mood-boosting ingredients.

The unit has also come out with BTV Impact, an accelerator and investing programme targeting impact-based initiatives, looking at ESG, diversity and sustainability.