India's love affair with chai maybe millennia old, but a fresh wave of young food startups are seeking to capitalise on the beverage’s popularity and venture capital (VC) is steadily flowing into space. Take chai café chain Chaayos, run by Sunshine Teahouse Pvt Ltd, which raised another $21.5 million from several VC funds this week. The chain, which competes in several cities against the likes of Chai Point,
Chai Kings and other smaller chai cafes, is looking to utilise the capital to feed its continuous and rapid expansion of outlets. “The continued confidence of our guests has allowed us to expand our cafe network at a fast pace and we will end FY20 with nearly 100 cafes. We shall endeavour to get to 300 cafes over the course of next 3-4 years,” Chaayos founder and CEO Nitin Saluja said.
The most recent fund raise comprises $18.5 million in primary capital secured from Think Investments and other investors, and another $3 million of venture debt from Inno- Ven Capital. The company had earlier raised $12 million in a Series B round from SAIF Partners, Hong Kong-based Integrated Capital and growth-stage Pactolus in September 2018.
A year earlier, it had secured about $2 million from Tiger Global Management, which had also led a $5 million Series A round in 2015 alongside investors like Ola co-founders Bhavish Aggarwal and Ankit Bhati. The capital raised will come in useful since the whole segment is attracting a robust stream of investors, with competition scaling up rapidly. For instance, while rival Chai Point, which is run by Mountain Trails Foods Pvt Ltd, had raised around `60 crore from investors including Eight Roads Ventures, Sama Capital, Milestone Capital and DSCGP Souza in July last year, Chennai- based Chai Kings has secured around $1 million from various investors.
Chai Point had more than 150 stores across eight cities at the end of July last year, along with 3,000 dispensers across 16 cities and 300,000 deliveries per month. Chai Kings has gone from four outlets to forty in just three years and plans to expand to other cities like Coimbatore and Hyderabad soon. Chaayos, meanwhile, has 80 stores across eight cities: Delhi, Mumbai, Bengaluru, Noida, Gurugram, Chandigarh and Faridabad and expects to finish the year with 100 stores.