NEW YORK: Procter & Gamble, the consumer goods giant, is partnering with a "crowdfunding" investment firm as it attempts to identify innovative start-ups.

CircleUp is an investment group which connects start-ups in the consumer products space – typically generating annual sales of $1m to $10m – with numerous investors spending a small amount.

These operators are usually too big to attract "angel investors", or affluent individuals that provide funds at an early stage in a company's development, but lack sufficient scale to interest private equity firms.

Andrew Backs, manager of new business creation at Procter & Gamble (P&G), told the Financial Times its motivations for such a move were varied.

"On the P&G side, it's really about looking for access not only to those companies and what they're working on; it's really access to their founders," he said.

More broadly, CircleUp acts as a useful vetting service, as it accepts a modest 2% of applications, meaning the most promising ideas are likely to gain prominence.

"If it's a bad idea, then it's just simply not going to get funded," said Backs.

CircleUp has reduced the amount of time it takes start-ups to raise the required capital from 12 months to around two months. Major corporations are increasingly essential in this area.

"With each passing year, the internal venture groups at the P&Gs and General Mills of the world are getting larger and more important," Ryan Caldbeck, chief executive of CircleUp, said. "They have mandates to go out and identify innovation."

General Mills, the food manufacturer, has also worked with CircleUp, especially as part of its efforts to find a wide range of natural and organic lines.

Meredith Schwarz, the manager of General Mills Ventures, suggested that when she identifies firms which are too small for her own company to back, she recommends they try CircleUp.

"I'm very curious to see some of the brands that raise capital on CircleUp," she added. "I want to stay in touch with them as they grow."

Data sourced from Financial Times; additional content by Warc staff