Blue Tokai, a specialty coffee and bakery brand has raised $₹35 million in a Series C round led by Belgium’s Verlinvest, the investment firm formed by owners of AB InBev. The Series C funding round also saw the participation of existing investors, Anicut Capital and A91 Partners.
Blue Tokai will use the fresh funds to bolster Blue Tokai’s presence in existing metro markets and expand into new Tier I and Tier II cities across India over the next three years.
“With this latest funding, we have the opportunity to bring our passion for coffee to even more people. We will utilize these funds to accelerate our expansion across all channels – from our own cafes to B2B and B2C platforms,” shared Matt Chitharanjan, Co-founder and CEO, Blue Tokai.
In the past 12 months, the company claims to have more than doubled its store count to 130 outlets. The funds will also be used to expand to over 350 locations in the next 30-36 months.
“This investment arrives at a strategic time, enabling us to accelerate our expansion and drive profitability while maintaining our commitment to coffee quality. We are experiencing a significant surge in demand for quality coffee and bakery products, and this funding round further validates our hypothesis regarding market growth. We have been steadily adding five cafes each month for over a year, and this capital equips us to meet our three-year target of 350+ cafes in India,” added Shivam Shahi, the Co-founder and COO of Blue Tokai Coffee Roasters.
The funding round now values the startup at around ₹1,500 crore (about $180 million), up from around ₹700 crore at the beginning of 2023. In January 2023, Blue Tokai raised $30 million in its Series B funding round led by A91 Partners. It also secured ₹17 crore from the Anicut Angel Fund in August 2022 and close to ₹40 crore from early-stage funds and angel investors in 2020.
In its financials, Blue Tokai reported an extraordinary increase in revenue by operation. Revenue grew 72% in FY23 to Rs 127.45 crore from Rs 74 crore in FY22. In tandem, the company will once again widen its losses to Rs 43 crore in FY23 from Rs 12.3 crore in the last financial year, according to insights from startup data intelligence platform TheKredible.
Arjun Anand, Managing Director and Head of Asia, Verlinvest, said, “We are thrilled to partner with Blue Tokai in their mission to bring specialty coffee to millions across India. Matt, Namrata, and Shivam have brilliantly crafted a cult brand known for its exceptional products and customer experience. Together, we are committed to elevating Blue Tokai to new heights, creating India’s leading coffee chain, and delighting consumers with unparalleled quality and service.”
Founded in 2013 by Matt Chitharanjan, Namrata Asthana, and Shivam Shahi, Blue Tokai claims to have grown its presence, more than doubling its store count to 130 outlets in the past year. The newly acquired funds will enable the brand to expand to over 350 locations within the next 30-36 months, drive product innovation, and explore new sales channels.
Verlinvest, established in 1995, focuses on investments in FMCG, health, consumer technology, and lifestyle sectors, with a diverse portfolio that includes brands like Oatly, Vita Coco, and BYJU’s. Verlinvest backs other companies like Purplle, Veeba, and Epigamia (also backed by Deepika Padukone) in India.
Verlinvest has a proven track record of successfully scaling consumer brands in India, including Lahori, Epigamia, Heads Up For Tails and Wakefit. This partnership is also further illustrative of Verlinvest’s focus on supporting high-quality F&B brands globally, including notable investments with Insomnia Cookies and Tony’s Chocolonely.
Third Wave Coffee, Slay Coffee, Sleepy Owl Coffee and Rage Coffee are a few Indian startups that have recently raised funding from VCs to take on the larger players in the space. Third Wave had secured a $35 million cheque led by homegrown private equity fund Creaegis last September.
The biggest competitors to Blue Tokai are Rage Coffee, Third Wave Coffee Roasters, Slay Coffee, Sleepy Owl, and Seven Beans Co. in the specialty coffee category.
Incidentally, Third Wave Coffee turned out to be the biggest revenue-generating brand for venture-funded startups in FY23. However, the company had to go through some organizational changes; it laid off more than 100 employees after a $35 million fundraise led by homegrown private equity fund Creaegis in September last year. That finally led to a change in the leadership when Rajat Luthra took over from Sushant Goel of KFC as the CEO.
In a related development, GRM Overseas has taken a 44% equity stake in Rage Coffee through a strategic combination of primary infusion and secondary buyout, an indication that investments and strategic partnerships would continue to pour into the rapidly growing segment of coffee and bakery.
