Business development of a novel functional food concept

Abstract: Functional food (FF) is a relatively new sector in the food industry. FF are products that have an added nutritional value for consumers that is communicated through nutritional and health claims, and act as preventive agents of chronic diseases. Innovation of new FF products has grown to become an important impact in research towards preventing welfare diseases. The rate of innovation in this field is nevertheless low and the willingness of companies to invest in ideas and research projects that will lead to novel FF products is today weak. The main reason is the regulations for health claims. The purpose of this study is to investigate the venture creation process of FF based start-ups, with a case specific research question of how an analysis technique targeting the food industry can be commercialized. The purpose will be addressed by simultaneously investigating different venture creation activities, and how these activities can be applied for FF. In order to build a theoretical framework for the analysis, an extensive literature search connected to the key terms yielded four categories of venture creation activities: • Planning activities • Establishing legitimacy • Market activities • Resource transformation These categories were connected to four important aspects specific for FF: • Regulatory approvals • Product development • Intellectual property rights • Consumer acceptance The methodology used to explore this area and get a deeper insight in the research topic was by conducting qualitative insider action research of one case. The data has been collected through; numerous meetings with founders and stakeholders, daily operation actions, observations, notes, experiences, conversations, memories and joint-actions from one year of venture creation in the case. The empirical data collection revealed that the studied venture chose to perform an iterative conceptualization process followed by a business model canvas and a timeline of activities in the category of planning activities. The venture met issues when investigating regulatory approvals in the category of establishing legitimacy. Through contact with experts they revealed a path that potentially would not include the health claim regulation. The market activities were primarily focused on customer development where identifying customer demand was considered of major importance. The product/technology development as well as funding applications was left to be performed after the concept was verified by customer demands. The conclusion consists of a proposed framework of how to commercialize an analysis technique targeting the FF sector. This proposed framework could potentially serve as a general framework when commercializing other FF products or services.