Toffee Coffee Roasters has completed an important Pre-Series A round of funding, raising ₹5 crore in new capital. The series A funding was led by the stellar early-stage funders IPV, with key supplementary investments being made by several other investors such as 66 Bridge Partners, Abhijit Vemuganti and Invesst. It is a timely capitalisation, as the adoption of high-quality coffee into both home and away consumption channels in India is accelerating, and this capitalisation will place the company on its next stage of tremendous scale and growth.
The capital obtained will be carefully invested in different aspects of the business to support streamlined operations and aggressive growth. A significant part of the new capital, estimated to be around 60% of the total capital, is dedicated to strengthening the working capital of the company. This is an essential allocation that is aimed at directly funding the fast-growing operational requirements of the company as it gears up its production and distribution services across the nation.
A specific percentage of the funding is aimed at enhancing the core infrastructure of the brand. About 10 to 15% of the capital will be used to strengthen and expand the most vital part of the business, the backend roastery, which will improve capacity and quality control. The remaining 10% is specifically spent on enhancing the packaging of its product lines, such that the brand’s premium identity remains intact by way of its packaging and shelf life. The remaining 10-15% of the remaining will be strategically invested in the development of the new products, which will enable the brand to expand and diversify its current portfolio of speciality coffee offerings enormously.
The key value proposition of Toffee Coffee Roasters is that it can easily fill a significant gap currently present in the domestic coffee market. Although India ranks among the leading coffee producers in the world, historically, many coffee drinkers have had to appreciate the quality of artisanal coffee by relying on either costly imported coffee products or critically acclaimed brews only offered in luxury cafes. Its other market, the at-home market, has continued to be vastly dominated by the highly accessible yet less specialised brands of instant coffee.
The brand is already characterised by a significant market presence and efficiency. The initial significant public presence Toffee Coffee Roasters received was when it was covered on the popular business reality show Shark Tank India, and it is also supported by OYO CEO Ritesh Agarwal. This exposure and support have assisted the brand in creating an imposing presence in the digital retail space, where it is now one among the top five coffee websites in India in terms of online traffic and consumer traction. In spite of the current estimated 1 to 2% of the total coffee category, the growth statistics of the company are impressive.
The company is able to manufacture over 5 tonnes of coffee monthly, which equals over 40,000 units of coffee that have been consumed monthly by the customer base. This book approximates about 3 to 4 lakh cups of coffee consumed in the country in one month at home. Having the new capital and strategic plan, Toffee Coffee Roasters targets to increase its production capacity by 10 times to 50 tonnes per month. This scale will help it make a dramatic increase to ₹8 to ₹10 crore of annualised revenue and grow its direct presence to 8 to 10 lakh customers. The leadership of the company also relies on a significant amount of prior experience, and the team includes the experience of such organisations as IIT, Zomato, and Starbucks.
Its two Co-founders, Rishabh Nigam and Nandini Shrivastava, are the brand’s expert guides. Nigam, with his background of holding key growth positions in organisations like ZEE5, Pocket FM, and upGrad, has a track record, especially in his experience at Pocket FM US, where he helped scale the revenues in the organisation that started at zero to climb to $15 million within one year. The key product and operations functions are under the stewardship of Shrivastava, who comes with experience in JSW and has an intense focus on the realisation of process efficiencies and innovation in the product line. Toffee Coffee Roasters, under their joint leadership, has already served more than 150,000 consumers across the country.
The vision is ideal for the expanding Indian market that is estimated to be worth about $2 billion with an average compound annual growth rate (CAGR) of more than 20%. The market is fairly balanced between in-home and out-of-home consumption, and the increasing move to no longer use instant coffee is an ideal opportunity in the mass-premium segment.
The Pre-Series A funding round of ₹5 crore will serve as a pivotal point for Toffee Coffee Roasters, which has the resources and strategic support necessary to implement its mass-premium vision. Through the successful mobilisation of capital in the areas of operational growth and product improvement, the ability to ride on its existing brand visibility and presence in the market as one of the leading online coffee retailers, the company is strategically situated to exploit the growing consumer need for speciality coffee. This investment is a testament to the positive investor confidence in the potential of the brand to bring change in the consumption pattern of the Indian market and make Toffee Coffee Roasters dominate the projected speciality coffee revolution that is set to reach a large and varied nationwide consumer base.