Blue Tokai raises $30 million in funding from A91 Partner
Mumbai-based investment company A91 Partners, specialty coffee business Blue Tokai Coffee Roasters has raised $30 million (Rs 245 crore) in its most recent funding round. In addition to Grand Anicut Fund and 8i Ventures, other current investors White Whale Ventures and some angel investors sold shares during the investment round.
According to those familiar with the transaction, the coffee brand's post-investment valuation is anticipated to have been Rs 650 crore. The current capital investment by the Gurugram-based company comes as consumer and investor interest in other new-age speciality coffee companies has surged. Specialty coffee businesses raised $41.1 million in 2022, up from $11.4 million in 2021, according to research platform Tracxn's data.
The specialty coffee space includes companies such as Third Wave Coffee Roasters, which last year raised $20-25 million from WestBridge Capital; Slay Coffee, backed by Fireside Ventures, Alteria Capital and Rebel Foods; Sleepy Owl Coffee, Hatti Kaapi, and Rage Coffee. These startups compete with established chains such as Starbucks, Cafe Coffee Day and Barista.
Blue Tokai plans to add 200 new stores over the next three years to add its current footprint of 60 stores, Blue Tokai’s co-founder and CEO Matt Chitharanjan said. Blue Tokai did not disclose its valuation, but Chitharanjan said it had seen a three-fold increase in valuation over its last fundraising round. He also said that less than 10% of the amount raised, or nearly $3 million, is secondary component, while the remaining is fresh capital.
“We started off as an online and B2B business. It was only after two years that we launched our first cafe. Having a physical outlet was important in terms of engaging with customers. As we expanded our cafe presence, we realised that having people to try out different products and guide them into finding out what coffee they like, has been very beneficial for us in building the brand,” he said. Co-founder and chief operating officer Shivam Shahi said Blue Tokai was present in nine cities and planned to expand to four more cities in the next 3-4 years. Shahi joined the company in 2016.
Blue Tokai’s cafes account for nearly two-thirds of its revenue. Abhay Pandey, general partner at A91 Partners, said that with increasing availability, coffee is emerging as an alternative beverage choice in India. “People are consuming more coffee, even in other countries like China, where there is a strong tea culture. We believe that this is bound to happen in India over the next 10 years and we will see high growth rates in this period,” Pandey said. “We are getting into that virtuous cycle of demand and supply reinforcing each other in India”.
According to the CEO, Blue Tokai reported sales of Rs 74 crore for the fiscal year that ended on March 31, 2022, and is currently clocking a run rate of Rs 150 crore. He also stated that Blue Tokai intends to achieve profitability by the conclusion of the current fiscal year. The company, which was founded in 2013 as a roastery by Chitharanjan and Namrata Asthana, serves its pan-Indian operations out of its three roasteries, which are located in Delhi, Mumbai, and Bengaluru.
Blue Tokai conducts business through three primary verticals: physical cafe stores, online shops and marketplaces, and business-to-business (B2B), where it rents coffee makers to corporations and sells coffee to lodging establishments, eateries, and cafes. We'll also be investing in more advanced technologies for our B2B leasing business, which has been performing well for us over the past several months, in addition to the cafes. To promote e-commerce and marketplace operations, we also intend to add more products to our portfolio, Shahi said.
According to those familiar with the transaction, the coffee brand's post-investment valuation is anticipated to have been Rs 650 crore. The current capital investment by the Gurugram-based company comes as consumer and investor interest in other new-age speciality coffee companies has surged. Specialty coffee businesses raised $41.1 million in 2022, up from $11.4 million in 2021, according to research platform Tracxn's data.
The specialty coffee space includes companies such as Third Wave Coffee Roasters, which last year raised $20-25 million from WestBridge Capital; Slay Coffee, backed by Fireside Ventures, Alteria Capital and Rebel Foods; Sleepy Owl Coffee, Hatti Kaapi, and Rage Coffee. These startups compete with established chains such as Starbucks, Cafe Coffee Day and Barista.
Blue Tokai plans to add 200 new stores over the next three years to add its current footprint of 60 stores, Blue Tokai’s co-founder and CEO Matt Chitharanjan said. Blue Tokai did not disclose its valuation, but Chitharanjan said it had seen a three-fold increase in valuation over its last fundraising round. He also said that less than 10% of the amount raised, or nearly $3 million, is secondary component, while the remaining is fresh capital.
“We started off as an online and B2B business. It was only after two years that we launched our first cafe. Having a physical outlet was important in terms of engaging with customers. As we expanded our cafe presence, we realised that having people to try out different products and guide them into finding out what coffee they like, has been very beneficial for us in building the brand,” he said. Co-founder and chief operating officer Shivam Shahi said Blue Tokai was present in nine cities and planned to expand to four more cities in the next 3-4 years. Shahi joined the company in 2016.
Blue Tokai’s cafes account for nearly two-thirds of its revenue. Abhay Pandey, general partner at A91 Partners, said that with increasing availability, coffee is emerging as an alternative beverage choice in India. “People are consuming more coffee, even in other countries like China, where there is a strong tea culture. We believe that this is bound to happen in India over the next 10 years and we will see high growth rates in this period,” Pandey said. “We are getting into that virtuous cycle of demand and supply reinforcing each other in India”.
According to the CEO, Blue Tokai reported sales of Rs 74 crore for the fiscal year that ended on March 31, 2022, and is currently clocking a run rate of Rs 150 crore. He also stated that Blue Tokai intends to achieve profitability by the conclusion of the current fiscal year. The company, which was founded in 2013 as a roastery by Chitharanjan and Namrata Asthana, serves its pan-Indian operations out of its three roasteries, which are located in Delhi, Mumbai, and Bengaluru.
Blue Tokai conducts business through three primary verticals: physical cafe stores, online shops and marketplaces, and business-to-business (B2B), where it rents coffee makers to corporations and sells coffee to lodging establishments, eateries, and cafes. We'll also be investing in more advanced technologies for our B2B leasing business, which has been performing well for us over the past several months, in addition to the cafes. To promote e-commerce and marketplace operations, we also intend to add more products to our portfolio, Shahi said.
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