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Tea cafe chain Chaayos gulps $53 million in Series C funding led by Alpha Wave Ventures

Chaayos did not disclose the valuation at which the company raised the funds, but reportedly, the company has been valued at $240-250 million.

June 23, 2022 / 11:31 AM IST

Homegrown tea-focused cafe chain Chaayos has raised $53 million as a part of its Series C funding round led by Alpha Wave Ventures as the Tiger Global-backed company looks to capitalise on the rising demand for restaurants and cafes with the Covid-19 situation normalising in most parts of the country.

Chaayos’ existing investors including Elevation Capital, Tiger Global and Think Investments also participated in the current round, the company said in a statement on June 23. Chaayos will use the fresh fund for tech-enhancement, hiring, and store expansion, the company said.

“The latest capital raise will help us deepen our technology investments to further enhance our guest experience...We will continue to grow our cafe footprint and go deeper into the cities we are present in and explore new markets. We are also continuously on the lookout to hire talent to handle the scale that we aspire for,” said Nitin Saluja, co-founder of Chaayos.

Chaayos did not disclose the valuation at which the company raised the funds, but reportedly, the company has been valued at $240-250 million.

Chaayos competes with major players in tea cafes such as Chai Point, Chai Thela, and Tea Trails.

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Companies such as Cafe Coffee Day (CCD) also offer various varieties of tea under their banners. Recently, Coffee Day Global Ltd, which owns and operates popular coffee chain has posted a net profit of ₹65.40 crore for the fourth quarter ended on March 31, 2022.

The company’s positive growth seems to be a result of Covid-19 restrictions easing down and as a result, the demand for cafes going up.

Founded in 2012, by Saluja and Raghav Verma, Chaayos is a tea cafe chain with 190 stores across six Indian cities and plans to add 100 more by the end of 2022.

The fundraise comes at a time when startups are getting conservative and are attempting to extend their runway in an uncertain funding environment. Since the beginning of 2022, startups have laid off over 10,000 employees and the number keeps growing.

Chaayos claims to provide its customers an option to personalise their cup of tea in 80,000 combinations. The company said, “The IoT-enabled (Internet of things-enabled) patented tea bots called Chai Monks, help in fast brewing of a cup of tea without any training.”

Chaayos, today claims to have a Net Promoter Score or NPS of 78.

Chaayos said it uses artificial intelligence (AI) to speed up processes on its platform. For instance, Chaayos uses facial recognition software to enable faster checkouts and payments. In 2019, however, the company had to face fire for the use of facial recognition while billing customers as Twitterati had expressed concerns over it.

Users also raised questions after the terms and conditions of the company had been found to state that customers should not expect their information to always remain private.

In its response to issues flagged by customers, Chaayos had said the data from the facial recognition feature was encrypted and could not be accessed by any party, including Chaayos itself except for the purpose of logging in our customers.

Chaayos also provides the option of home delivery of its products. The company said “Chaayos omni-channel approach helps guests order in Chai when they cannot visit a Chaayos cafe. Which started off as a niche use case, Chaayos online Chai deliveries now account for 45 percent of revenues.”
Mansi Verma
first published: Jun 23, 2022 11:30 am
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