Kicking off with an initial investment of 35 million euros from the London-based sweetener supplier, Tate & Lyle Ventures is slated to have a particular focus on health and renewable ingredients.
"Food and healthcare are moving closer together," commented David Atkinson, co-managing partner, along with Simon Barnes, of the new venture arm.
New technologies will be instrumental in this convergence as the worlds major food companies reposition themselves with a focus on innovation and health, he added.
This latest move from Tate & Lyle is a further sign of the food industry delving deeper and deeper into functional foods, spying the rich pickings to be had from the burgeoning 4 billion euro European market for foods with a health benefit.
Tate & Lyle is not the first ingredients supplier to invest in future innovations through a venture capital fund. Danish ingredients firm Danisco launched Danisco Venture several years ago, placing capital of about 67 million euros into the fund.
And US agro-firm Cargill, that produces a rainbow of foods from cocoa to salts, has Cargill Ventures.
In parallel with the functional food investment, Tate & Lyle Ventures has earmarked a slice of the funds to investigate renewable ingredients.
The firm currently supplies ethanol to the growing biofuel industry but appears to be looking for future gains from the alternative energy market.
"Bio-science is finally coming to the fore as the world makes the shift to a renewable economy, where crops will provide everything from our nutritional needs to new forms of fuel and biomaterials, said Simon Barnes.
Knocked by changes to the EU sugar regime Tate & Lyle had a difficult year last year, when profits fell 79 per cent to 62 million euros. But last month the maker of successful sweetener brand Splenda announced a strong start to the financial year, with first quarter results well ahead of last years figures.