Online tea brand Vahdam Teas has secured $1.4 Mn (INR 9 Cr) in a round of funding led by VC firm Fireside Ventures. The startup’s existing investors – Singapore Angel Network, Mumbai Angels and some HNI investors – also participated in the round.
With this, some of the angel investors from the Seed round have also exited the venture. Post the investment, Fireside Ventures founder Kanwaljit Singh will be joining Vahdam Teas as a board member.
Commenting on the development, Singh stated, “India is well known globally as a producer of the finest Teas and it’s heartening to see a young brand and a young, dynamic entrepreneur leading the charge to showcase the best of Indian Teas to consumers across the world. Vahdam Teas has built a great supply chain & traction in the last 2 years and we are privileged to join him on this journey and hope to help build an iconic Indian brand that’s enjoyed by consumers across the world.”
As part of its second institutional fundraise, Vahdam Teas has picked up an additional $310K (INR 2 Cr) in a secondary transaction. According to sources, the Delhi-headquartered startup will be utilising the newly-raised financing to expand its product portfolio and introduce new categories of flavoured tea and wellness tea.
A portion of the capital will also be used to bolster its warehousing and logistical capabilities in the US, which currently accounts for over 70% of Vahdam Teas’ total sales. The funding will also enable the platform to market its brand aggressively, in a bid to penetrate deeper in the Indian market.
Speaking about the latest funding round, Vahdam Teas founder Bala Sarda said, “Over the last 2 years, we have worked very hard in setting up an efficient supply chain, right from the estates of India to our consumers in the US and other parts of the world, with a sole vision to make available the freshest cup of tea to consumers by leveraging technology. And, we plan to now further penetrate our key markets with customer acquisition and marketing. It is an honour to have Fireside Ventures come on board, with their massive experience in building consumer brands.”
Related Article: Fireside Ventures Leads $2.5 Mn Funding Round In Vahdam Teas
Vahdam Teas: Taking Premium Tea To The US Market
Launched in 2015, Vahdam Teas is a vertically-integrated, online-first tea brand. As stated by Sarda, all Vahdam teas are procured directly from 150-200 plantations and tea growers in India and Nepal within 24-48 hours of production. After thorough processing, cleaning and packaging, the teas are shipped to international markets within three to 12 days.
Currently possessing one warehouse in Delhi and 3 sourcing centres in Nilgiris, Assam, and Darjeeling respectively, the startup caters to over 150K customers in up to 83 countries. It clocks more than 15,000-20,000 orders every month. At present, the company sells loose tea leaves with over 70 in-house signature blends.
Loose tea, according to Sarda, currently accounts for around 80% of all sales. On an average, Vahdam Teas boasts a gross profit margin of more than 50%, which has, in turn, driven its revenue 7x over the last 10 months.
In January this year, the startup raised $650K Seed funding in a round led by Mumbai Angels Network. At the time, it was reported that Vahdam would be deploying the raised funds towards marketing, product development, and opening a warehouse in the US.
Commenting on the investment, Balvinder Kalsi of Mumbai Angels had stated at the time, “India is the second-largest producer of tea globally. Yet, we do not have a truly Indian tea brand selling quality teas in the global markets. We are very excited about what Vahdam has been able to accomplish till now and the large market opportunity in the key overseas markets. Bala with his industry experience has a great opportunity in this space.”
Fireside Ventures: A Snapshot
Founded by former Helion Venture Partners senior Managing Director Kanwaljit Singh in 2014, Fireside Ventures is a consumer-focussed VC firm that secured backing for its maiden fund from some of India’s top family offices including PremjiInvest, consumer goods maker Marico’s Mariwala, and the RP-Sanjiv Goenka Group in June 2017.
Prior to that, it had raised $27.9 Mn (INR 180 Cr) to back early-stage startups in food and beverage, personal care, home products, kids and education sectors. The firm aims to build a portfolio of about 30 companies, in which it will invest about $155K (INR 1 Cr) to begin with.
Last year, it had invested in Bengaluru-based on-demand online coffee shop DropKaffe. It had also backed Delhi-based Indulge Beverages, maker of premium tea and coffee capsules under brand Bonhomia in 2015.
A Look At Some Of Vahdam Teas’ Major Competitors
In the premium tea category, Vahdam Teas competes with Ratan Tata-backed Teabox and West Bengal-based Udyan Tea. Siliguri-based Teabox had also previously raised $6 Mn in Series A funding from JAFCO Asia, Keystone Group and Dragoneer Investment in March 2015. In the Indian tea industry, there are a number of startups that are working both in the online and offline domains.
A major player in this vertical is Gurugram-headquartered Chaayos, which recently raised $2 Mn funding from existing investor Tiger Global Management. The startup originally raised an undisclosed amount of Seed funding in March 2014. In May 2015, it raked in $5 Mn Series A funding from capital firm Tiger Global Management.
Saama Capital-backed Chai Point is another well-known name in this space. In August, Mountain Trail Foods-operated Chai Point reportedly raised an undisclosed amount of funding from existing investors, including Eight Roads Ventures and DSG Partners.
With the latest funding from Fireside Ventures, Mumbai Angels and others, Vahdam Teas is looking to push its profit margins even further by tapping the relatively unexplored tea market in the US.