UK supermarket giant Tesco and Australia’s Woolworths are among five grocery heavyweights to sign up to a new $125m investment fund to back start-ups.

They have joined forces with Ahold Delhaize, Empire Company/Sobeys and Shoprite to establish the venture fund W23 Global with an aim of accelerating innovation across retail.

W23 Global will seek to invest the funds over five years in “the world’s most innovative start-ups and scale-ups with the potential to transform grocery retail”.

Each partner will contribute $25m over the five-year period.

The fund will seek to identify start-ups that “deploy technology to enhance customer experiences both in store and online, increase productivity across the grocery value chain and address the sector’s sustainability challenges, looking at everything from biodiversity in agriculture to sustainable packaging”.

Each retailer’s CEO will sit on the fund’s investment committee.

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W23 Global portfolio companies will be free to contract with any customer, whether a venture-fund partner or otherwise, on whatever terms they decide.

The fund builds on Woolworths’ existing venture-capital fund, W23 Australia, which was set up in 2019 and has backed businesses including meal-kit seller Marley Spoon and plant-based specialist All G Foods.

That fund is run by FMCG and grocery retail veteran Ingrid Maes and she will also take charge of the newly-announced W23 Global fund, which will be domiciled in the UK.

She said: “W23 Global is a pioneering international VC fund with a uniquely powerful proposition for both our investors and portfolio companies. At a time when innovation is reshaping retail and value chains across the economy, we aim to offer our investors incomparable access to transformative innovation in grocery and sustainability across the globe.

“W23 Global will also work with its investors to identify common unaddressed challenges and identify entrepreneurs best placed to innovate new solutions. Our ambition is to offer our portfolio companies faster pathways to global scale, without being exposed to a venture fund anchored by a single strategic investor.

“With five of the world’s leading grocery CEOs sitting on our investment committee and access to our broader eco-system, our founders can test and develop their ideas quickly based on an accelerated understanding of retailers’ needs.”

Tesco Group CEO Ken Murphy said: “We are excited to be collaborating with four other leading grocery retailers in this new investment fund. We are passionate about seeking out the best retail innovations and finding ways to make everything we do sustainable, and this partnership allows us to do that on a truly global scale.”