Co-founded by brothers Ani and Ayan Sanyal, Kolkata Chai wants to be “the place to get good chai” in the United States. It’s a big market. The Sanyal brothers estimate that the national tea market represents an activity of 12.7 billion dollars per year.
To pursue it, the duo tell TechCrunch that Kolkata are about to embark on a new chapter of their business: After spending years getting started with income from their agency business, Kolkata Chai accepts for the first time external capital.
The startup recently raised a $1 million funding round from investors including Boba Guys founders Andrew Chau and Bin Chen, 500 Startups partner Paul Singh, Sharma Brands CEO Nik Sharma, CEO of ‘Immi Eats Kevin Lee and Vice Media Suroosh co-founders Alvi and Zanab. Hussain Alvi.
There are easier ways to build a business than trying to disrupt a cup of Indian masala chai. The drink is extremely personal: no two households will serve the same cup and everyone has their preference when it comes to the proportions of ginger and cardamom.
But what the cellar requires in technique, it also receives in love: it is a basic language shared within Indian culture. So, it’s no surprise that given its cultural importance, coupled with the growing popularity of chai in Western countries, a series of direct-to-consumer companies have emerged to launch their own masala chai blends, bottled drinks and coffees.
Kolkata’s decision to go for it might seem controversial these days, especially with the community ventures that users are excited about. Will quality struggle with corporate-type incentives? Should the chai be watered down? Kolkata Chai began as a New York haunt, based on the Sanyal brothers’ trips to Kolkata each summer. It presents itself as a sensible view of authenticity, so any threat to this ethos could harm the company.
“You can boot as long as you want, but there are some limits to that,” Ani Sanyal told TechCrunch. “After two years of navigating COVID-19, we have exhausted all possible avenues; but at the same time, I think we’re intentional about how we raise capital.
Indeed, the startup says it intentionally gathered its new round of funding from high net worth individuals in the form of a seed round rather than one or more traditional venture capital funds. The reasoning, Sanyal continues, was that they wanted “patient capital”.
Kolkata Chai has not gone the crowdfunding route, but rather has chosen key leaders and founders in their industry who understand the food and beverage space from whom they can learn more, including the budgeting. Ayan Sanyal added that the startup wanted to wait until the company was in a place where it felt comfortable sharing its future plans and understanding what a long-term revenue mix might look like.
(Kolkata’s journey resembles that of Boba Guys, a popular tea brand that has also eschewed traditional venture capital funding.)
Kolkata Chai hopes the money will help transform it from a proof-of-concept company into a brand to be reckoned with. In the first nine months, the startup’s DTC business generated approximately $160,000 in revenue and helped it build a profitable business during a pandemic. Based on this, Kolkata believes that its future lies more in the world of e-commerce. It will keep its New York store and use pop-ups as a marketing vehicle.
Eventually, the brothers say, the company could grow through acquisitions and even grow through content and media that expand its initial audience. Even though the brand started out teaching people that “chai tea” was a repetitive descriptor perpetuated by Starbucks, it wants to continue taking spicier stances.
“We built the first brand for millennials and our population with very few resources,” says Sanyal. “I think we can really span all of these different worlds, and more importantly, not just [build] products and things for South Asians, but really to be a bridge between our culture and the wider western world.