AbCoffee, a specialty coffee chain, recently secured $3.4 million in a series A funding round led by venture capital fund Nexus Venture Partners. Tanglin Venture Partners, an existing investor, also joined in the funding.
The Mumbai-based company intends to use the fresh capital to enhance its supply chain and technology stack. The goal is to make its affordable specialty coffee more accessible and quicker through its retail “grab-and-go” outlets. This funding will enable AbCoffee to scale up its operations effectively.
“In India, we have grown up in a chai environment, predominantly in the west of India, and filter coffee in the south. The way it works is that you grab a chai, wait for three to seven minutes, depending on how big a chat you want to have, and then leave. So, it’s not technically grab and go, but an Indianised version of that,” Abhijeet Anand, co-founder of AbCoffee, said.
The funding round anticipates a threefold increase in the valuation of AbCoffee, reaching approximately $15 million (around Rs 124 crore) in less than six months.
“We are focusing on supply chain optimization, vertical integration, and building up our technology stack to bring on-demand coffee at the lowest prices,” Anand said.
Established in 2022, AbCoffee presently runs 49 outlets in cities like Mumbai and New Delhi. These outlets have an average size of 120 square feet, and the company acquires its coffee beans from Chikmagalur, Karnataka farms.
Unlike other coffee companies, AbCoffee has found success in its delivery channel, surpassing industry standards and providing a higher value proposition, as stated by Anand. “Delivery has helped in our pickup as well and made us more popular in our neighbourhoods,” he said.
According to Anand, during favorable seasons, such as the monsoon, marketplace sales contribute to 30-45% of the total sales.
Before this, AbCoffee secured $2 million in a seed funding round in September 2023, with Tanglin Venture Partners leading the investment.
This recent funding aligns with the growing trend of technology-focused venture capital funds displaying interest in consumer brands with a physical presence. Nexus Venture Partners has also extended a term sheet to lab-grown jewelry maker Aukera.
“AbCoffee’s commitment to making specialty coffee accessible to the masses resonated strongly with us,” said Suvir Sujan, managing director, Nexus Venture Partners. “Their innovative tech model, coupled with their focus on high-quality, ethically sourced beans and efficient brewing methods, allows them to offer premium coffee experiences at surprisingly affordable prices.”
