How I got Accel Partners to invest in my startup – The Teabox Story
It was Sunday, the day after eSparks 2013 when I first met Kaushal Dugar, Founder & CEO of Teabox (then known as Darjeeling TeaXpress) and a fellow member of the Sandbox network, for a conversation over tea. The previous day they were declared as the winners of eSparks 2013 – India’s largest e-commerce showcase platform. During our conversation, Kaushal shared how difficult it was to do business from north-east India (Teabox is based in Siliguri, West Bengal) and how they struggled initially, but have managed to grow their customer base and revenue month-on-month. That was more than a year ago.
Enter 2014 – they have shipped over five million cups of tea, have exported Indian tea to 65+ countries and are maintaining a steady growth in customer base and revenue – 99% of which comes from outside India. Perhaps one of the first truly global e-commerce businesses from India, its entire revenue base is from outside India. With the global tea industry pegged at $40 billion and growing in double digits, Teabox seems to be sitting in a sweet spot for accelerated growth. Teabox recently announced that it has raised around $1million funding from Accel Partners and Horizen Ventures.
So how did they manage to pull this off and convince Accel Partners to fund their startup – a niche e-commerce business selling tea online and that too to customers outside India? Here’s the Teabox story till now, as shared by Kaushal Dugar.
Running an e-commerce business from Siliguri was never going to be an easy task, shares Kaushal. Selling a known product online such as a smartphone is an easier task since customers already know what the product entails. But in their case, it was selling tea — a consumable product which is more associated with the look, feel and smell. They realized this very early in their startup life and came up with two important things which could make them successful:
1) An exceptional process optimization to manage inventory and logistics.
2) Leveraging technology to do so and deliver excellent customer experience.
They started working closely with the tea garden owners in identifying and curating the best tea leaves for their products, setup a robust and efficient processing and packaging mechanism, and tested with various shipment and delivery services like DHL, FedEx, EMS (India Post) and Air Mail to identify the best and efficient service provider for each country to deliver their product to their customers as quickly as possible.
Kaushal shares that currently their shipment process is so optimized that they know for each pin code in each country they ship to (65+ countries) which service provider ships the fastest. They have also identified the most reliable payment service for each country – WorldPay, PayPal, PayU and others and have got them on-board as partners so that the customers feel comfortable using the payment service they already know about while ordering tea online from Teabox.
This entire process – from curating the best tea leaves to systemized process and packaging combined with optimized shipment and technology helps Teabox deliver fresh tea to its consumers within a week or less from production which otherwise typically takes three to six months. This explains why an ardent tea lover from Russia or Canada would be willing to pay anywhere from $100 to $1500 for a kilogram of the best of tea from India.
The fund raising
Again the process of fund raising for an online startup based in a small city like Siliguri, outside of the well-known metros, was a challenge. Kaushal shares he spent many days cold calling investors, meeting them at few startup events, followed up with more calls and emails. But not many showed interest in the venture. This hit his confidence a bit. He realized that conversing over phone and email was a hindrance and he needed to have more in-person and face-to-face interactions to showcase and communicate what they were doing and to convince investors about Teabox’s vision and potential growth story.
He flew to Delhi, Mumbai, Bangalore and Hyderabad where he setup meeting with some angel investors and VC funds to showcase Teabox. This time, a few angels and VCs showed interest and gave him an opportunity to pitch Teabox – but not many were convinced yet. Accel Partners had shown keen interest, but nothing was finalized.
This is when eSparks 2013 happened. Kaushal says, “Being the winner of eSparks 2013 really put me in the spotlight, it helped me reinforce my ideas, and gave me access to folks/investors I may not have had a chance to meet given the fact that we were based completely out of the ecosystem — in North Bengal.”
Soon after winning eSparks — the conversation with Accel Partners accelerated and the deal was closed in the later part of 2013 with Accel leading and Horizen Ventures (Singapore-based early stage fund) participating in this investment round of $1million into Teabox. Prashant Prakash from Accel joined their board as advisor.
Now with all the process and system in place and money in the bank, Kaushal shares they are looking to grow their customer and revenue by 3-5x in the next 12 months and they believe the key to achieving this growth will be through strategic talent hiring with strong marketing, procurement and operational experience. At present, Teabox is a 21-member team (nine in Bangalore + 12 in Siliguri/Darjeeling) and will soon be expanding in Guwahati, Kochi/Nilgiris — building backward linkages and creating their own infrastructure in these tea growing regions. On the customer-facing front, they want to soon setup their own presence in Russia, the US, Japan, China, Germany, France and Western Europe.
When quizzed on the long-term vision for Teabox, Kaushal says, “Tea is just the beginning, we want to build a plug-n-play model — commodity supply chain business for spices, cereals and more leveraging technology. It’s a long way to go!”
This gives us insights into Accel’s interest and investment in Teabox which is in sync with their current e-commerce portfolio and how they can help and scale Teabox globally from their experience and expertise in this space and the learning from their other portfolio companies.
Kaushal shares the main challenge they are currently facing is to convince their employees that they are building a truly global business from their own small city, Siliguri, with customer experience as their number one priority. Kaushal and team are also working on creating a positive impact for the local community by partnering with few plantation owners to help the workers’ community through scholarships for their children so they can get access to better educational opportunities.
To end the conversation, Kaushal says, “One thing I would like to highlight to all startup founders is that many do get intimidated by the mumbo jumbo during the fund raising experience, especially if you are not from one of the major metros or startup hubs, or if you are not from one of the elite IITs/IIMs. But don’t get intimidated. Believe in your idea, your team, systems and processes you have built and the potential market. Once you are confident and convinced, it will be easier to convince others, be it business partners or investors. Believe in yourself, first!”
Check out some fresh and exotic teas from India at – http://www.teabox.com/