Co-founded by brothers Ani and Ayan Sanyal, Kolkata Chai aims 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 a turnover of $12.7 billion per year.
To chase after it, the duo tells blogline that Kolkata is about to embark on a new chapter of its business: After investing for years in earnings from their agency business, Kolkata Chai is taking on outside capital for the first time.
The startup recently raised a $1 million pre-seed round from investors including Boba Guys founders Andrew Chau and Bin Chen, 500 Startups partner Paul Singh, Sharma Brands CEO Nik Sharma, Immi Eats CEO Kevin Lee and Vice Media co-founders Suroosh Alvi and Zanab Hussein Alvi.
There are easier ways to build a business than trying to mess up a cup of Indian masala chai. The drink is very personal: no two households serve the same cup and everyone has their own preference for the proportions of ginger and cardamom.
But what chai asks in technique, it receives in love: it is a staple and shared language within Indian culture. So it’s not surprising that, given its cultural significance, coupled with chai’s rising popularity in western countries, a series of direct-to-consumer companies have sprung up to make their own masala chai mixes, bottled drinks, and cafes. launch.
Kolkata’s decision to go into business can feel like a controversial one these days, especially with community-grown businesses that users are passionate about. Will quality struggle with entrepreneurial incentives? Should the chai be watered down? Kolkata Chai started out as a New York haunt, based on the Sanyal brothers who travel to Kolkata every summer. It bills itself as a no-nonsense take on authenticity, so any threat to that ethos could hurt the company.
“You can boot as long as you want, but there are certain limitations to that,” Ani Sanyal tells blogline. “After two years of navigating COVID-19, we have exhausted all possible avenues; but at the same time I think we are consciously raising capital.”
Indeed, the startup says it deliberately put together its new funding round from high net worth individuals in the form of a party round rather than a traditional venture fund or funds. The reasoning, Sanyal continues, was that they wanted “patient capital.”
Kolkata Chai did not opt for crowdfunding but instead chose key executives and founders in their industry who understand the food and beverage space from whom they can learn more, including about budgeting. Ayan Sanyal added that the startup wanted to wait until the company was in a place where they felt comfortable sharing future plans and understanding what a long-term revenue mix might look like.
(Kolkata’s journey is similar to that of Boba Guys, a popular tea brand that also eschewed traditional venture capital financing.)
Kolkata Chai hopes the money will help the company move from a proof-of-concept company to a brand to be reckoned with. In its first nine months, the startup’s DTC business achieved approximately $160,000 in revenue and helped build a profitable business during a pandemic. Based on this, Kolkata thinks his future is more in the e-commerce world. It maintains its New York store and uses pop-ups as a marketing tool.
Ultimately, the brothers say, the company could expand through acquisitions and even grow through content and media that expand its initial audience. Although the brand started by teaching people that “chai tea” was a repetitive description perpetuated by Starbucks, it wants to continue to take sharper stances.
“We’ve built the premier brand for millennials and our demographic with very few resources,” says Sanyal. “I think we can really span all these different worlds, and more importantly, not just” [build] products and things for South Asian people, but really being a bridge between our culture and the wider western world.”