Chai Point, the largest organized Chai Company in India, today announced a $20 million Series C funding round, led by Paragon Partners. All existing investors – Eight Roads (Fidelityâ€™s India PE arm), Saama Capital and DSG â€“ participated in this round, with some of them investing super pro rata.
Chai Point is Indiaâ€™s largest organised brand in the INR 1.5 Lakh crore Chai market targeting 1 billion Indians. With the average per capita consumption of the beverage increasing at a steady rate of 20-30%, the market is ever expanding. Chai Point has solidified its leadership position in the organized Chai segment and created a unique brand in a market which is now witnessing an aggressive formalization drive. The Company delights its customers with 0.3 million cups of Chai a day across all its channels â€“ stores, delivery, and dispensers â€“ and is poised to do 5X more in the next 3 years.
Commenting on the investment, Amuleek Singh Bijral, Co-founder and CEO, Chai Point said â€œThis funding round is primarily aimed at further strengthening the brandâ€™s multi-channel go-to-market. A substantial portion of our investment proceeds will go towards deepening our sales, marketing, and service operations for our automated hot beverage dispending business – boxC.in – which is the next growth driver for the business. High quality tea and coffee is fundamental to our growth and we are going to expand and refine our underlying sourcing program â€“ â€œGarden to Glassâ€. Also, we look forward to delighting our customers with an especially enhanced food menu. â€œ
Professor Tarun Khanna, Harvard Business School, Co-Founder Chai Point said, â€œChai is integral to the rhythm of life in India. At Chai Point, we are using technology to enhance the customer experience, and are recommitting to strengthen our efforts towards environmental sustainability.
Siddharth Parekh, Co-Founder and Senior Partner, Paragon Partners, said â€œAmuleek and his team have built a strong brand with Chai Point, which has a great potential to be among the top home-grown brands in the country. We look forward to working with the Chai Point team and helping them scale up their operations.â€ â€œWe are bullish on the consumption story in India and are excited to partner with the Company. This investment is in line with our overarching investment theme of partnering high-calibre entrepreneurs with compelling business models.â€
Mr Parekh will also be joining the Board of the Company. DCS Advisory India (earlier Signal Hill Capital) was the exclusive advisor to the company for this fund raise.
Chai Point was founded in 2010 by Amuleek Singh Bijral and Professor Tarun Khanna of Harvard Business School and has now grown to become the largest organized Chai Company in India. Chai Point is an omnichannel Company with stores, delivery and fresh-milk based dispenser platform called boxC.in as its operating channels. Chai Point is set to launch its 100th store in May 2018 and has deployed close to 2,000 fresh-milk based dispensers. Chai Point is also the countryâ€™s largest hot beverage delivery brand and recently delivered its 11th Lakh flask. Key to Chai Pointâ€™s multi-channel capability is its proprietary cloud based platform called SHARK.
Read our featured story on Chai Point here.
Established in 2015, Paragon Partners is a private equity firm focusing on the lower mid-market segment in India. Investing out of its maiden fund Paragon Partners Growth Fund-I, the firm focuses on making investments in five key sectors comprising consumer discretionary, financial services, infrastructure services (asset light), industrials and healthcare services. The fund has a corpus of $120 million and invests $10 to $20 million in companies where it can play an active role in value creation.
In a competition to Chai Point, an another similar Tea-based startup — Chai Break, which is based out of Kolkata, had received Rs 5 crore angel funding from Venture Catalysts of Mumbai to expand outlets of its chains, mostly in Tier II cities.
India is one of the worldâ€™s biggest tea consumer and Chai Point plans to double down on what is estimated to be a multi-million dollar market opportunity. Over the coming months, Chai Point will also face competition from the Tata Group, which has already launched its Tata Cha tea cafes and plans to aggressively ramp up.
Speaking about beverage startups, KIVA, a Gurugram based startup in the modern ayurvedic health juice space, has recently raised an undisclosed amount of funding from several marquee investors, including entrepreneurs in India and Silicon Valley.