Chai Point, on Thursday, announced that it has raised Series-C funding of $20 million in a round led by Paragon Partners. Existing investors include Saama Capital, DSG and Eight Roads, the private equity arm of Fidelity India.
According to the press note sent by the company, some of the investors invested super pro rata. This essentially means these investors have the option of increasing their percentage ownership stake in the company in the follow-on rounds. The funding is aimed at further strengthening the brand’s multi-channel go-to-market. Chai Point, which has around 90 outlets in Bengaluru, Hyderabad, Pune, Mumbai and Delhi, has raised around $13 million before the current round.
Commenting on the fundraise, Amuleek Singh, Co-founder and CEO, Chai Point, said a substantial portion of the investment proceeds will go towards deepening the sales, marketing, and service operations for their automated hot beverage dispensing 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 programme – 'Garden to Glass'. Also, we look forward to delighting our customers with an especially enhanced food menu,” said Amuleek.
Chai Point first began operations in 2010 through retail outlets, primarily in tech parks, which housed their target audience. Chai Point claims that close to 0.3 million cups of chai a day are sold across all its channels – stores, delivery, and dispensers – and is poised to do five times more in the next three years.
Speaking of the investment Siddharth Parekh, Co-founder and Senior Partner, Paragon Partners, said,
“Amuleek 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. We 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.”
Siddharth 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 fundraise.
Professor Tarun Khanna, Havard Business School and Co-founder, Chai Point, said, “At Chai Point, we are using technology to enhance the customer experience, and are recommitting to strengthen our efforts towards environmental sustainability.”
The team claims the chai market to be worth Rs 1.5 lakh crore in India. They believe that the average per capita consumption of the beverage increasing at a steady rate of 20-30 percent.
Chai Point sees a 50 percent to 70 percent repeat in online orders a month and repeat rate of two to three times a week in store.