It's always a bad sign when the first reaction most people have to a chain getting out of an area is to ask "Since when were they doing that?" So, yes, given that the "Jeopardy" answer that no ever got right was "Best Buy's VC business," it should come as little shock that Best Buy has now officially shut down that area.
"Over the past five years, the company's venture capital unit — Best Buy Capital — had invested millions of dollars in eight early-stage start-ups with the hopes of exclusively selling new technology through its retail stores," noted the Minneapolis Star-Tribune. "But as new CEO Hubert Joly redirects Best Buy's resources toward core store and online operations, the company is winding down Best Buy Capital, according to two sources with knowledge of the situation. Best Buy officials declined to comment, except to say the unit still exists."
The story quotes Carol Spieckerman, president of consulting firm Newmarketbuilders, saying that the chain needs positive impact now, so investing in start-ups whose financial and technological benefits could be years away does not fit into that equation. "You can expect new leadership to prune anything that's a distraction from their mission of turning around their core business," Spieckerman said.
When the company launched Best Buy Capital in 2008, supporters touted the move as an innovative way to stay abreast of the latest technology coming out of Silicon Valley. Best Buy, after all, considered itself a technology company and wanted to cultivate ties with venture capitalists, the very people who kept their eyes on promising start-ups.
"We formed strong relationships with Silicon Valley," said Kim Garretson, Best Buy's former liaison to the venture capital community who now works at Ovative/Group, a digital marketing agency in Minneapolis. "We liked the fact that they could use us in their due diligence" of potential investments. For example, Best Buy could work with a start-up to test-market a product. That relationship could further develop into an exclusive distribution agreement or an outright acquisition in which the company could sell the product under its own brands like Insignia and Rocketfish.
- Star-Tribune story