Vahdam Teas, an e-commerce that’s focused on selling the freshest brews on the planet, has closed a Series A funding round worth $1.4 million to grow its business.
The funding was led by new backers Fireside Venture, Mumbai Angels, Singapore Angel Network and undisclosed existing investors. The two-year-old company previously raised a $500,000 seed round from angels in January of this year.
Vahdam’s biggest rival is Teabox, a five-year-old company that kickstarted the ‘tea-commerce’ model and has picked up $7 million in backing from VCs that include Accel.
Business model-wise, Vahdam has a similar approach to Teabox. It aims to speed up the time it takes tea to go from being picked to being served in a customer’s home. To do that, it sources leaves direct from plantations after which 95 percent is vacuum packed and prepared to be shipped direct to customers.
Tea is sold from the company’s website and through a partnership with Amazon, the U.S. e-commerce giant that has vast ambitions in India. The startup look part in Amazon’s India-based Launchpad program and it has a page on Amazon’s U.S. site.
Bala Sarda, the 25-year old CEO of Vahdam who comes from a tea industry family, said its tea typically takes 3-4 days from pick to land in major U.S. cities like New York, which constitute the majority of customers. That’s a huge improvement on traditional methods which can take as long as 10 months to reach the customer.
“Due to global boundaries and the fact that tea is primarily grown in India, Sri Lanka and China, while the huge consumers are US and Europe, the supply chain for the last 200 years was that teas were plucked and exported in bulk taking three to four months. They were then packed and handled by multiple middle men, by the time the consumer gets to have tea it is 10 months onward,” Sarda told TechCrunch in an interview.
The likes of Vahdam and Teabox have already massively disrupted that process, making tea both fresher and more cost efficient without the middlemen. But they are very much focused on premium tea, so the less fresh stuff in your local supermarket will be cheaper — this is strictly for tea snobs.
But there’s a large market for a good drop. Vahdam ships to over 70 countries but, likely because of its alliance with Amazon, Sarda said the U.S. represents around 70 percent of sales.
He did not disclose overall sales figures but he did say that Vahdam claims 150,000 registered customers. Revenue, which again is not disclosed, grew seven-fold over the past year, he added.
With this new funding in the bag, Vahdam is aiming to further develop its business in the U.S. and make further inroads in Europe. The company is also preparing to introduce a subscription-based service — which Teabox already offers — to encourage increased customer loyalty. Already, however, Sarda claims that 45 percent of the company’s buyers return for a repeat purchase every four months.
“We focus more on retention marketing than user acquisition marketing,” the Vahdam CEO said. “We’ve not really spent a lot of money on marketing, we’ve been focused on finding the product market fit.”
“Now we plan to focus more on marketing, logistical capabilities and launch into more categories including the subscription service,” he added. “With 150,000 customers we think we are still scratching the surface.”