Starbucks disruptor DropKaffe raises over $500k in fresh funding

Coffee-selling startup DropKaffe today announced a bridge round of about US$500,000, as the one-year-old company focuses on ramping up its production capacity and marketing.

DropKaffe, which started off as an online coffee selling company in Bangalore, pivoted its business model a few months ago to focus on offline sales and lock horns with industry leaders like Starbucks. It now sells bottled cold coffee online under the Coffiatto brand name, as well as across offline retailers.

“The objective was always to sell good coffee. In doing that we see more demand for this channel, so this is where we are focusing,” co-founder Chaitanya Chitta told Tech in Asia in an earlier interview.

Its coffee is available across a hundred retail outlets in Bangalore, and the company plans to be in about 500 outlets in the next four to five months, he said.

On Monday, he said the company was still looking to raise “institutional funding by the later part of this year.”

The fresh funding of US$500,000 was led by Fireside Ventures.

DropKaffe is also planning to extend its line from coffee to other dairy and fruit-based beverages in the future.

“The muscle that we are building is around dairy from sourcing, manufacturing, distribution to marketing,” Chaitanya said.

“There are several categories within this space, including smoothies, protein shakes and beverage as meal replacements in the ready to drink format. We feel that all of them are a fair game for us but at the moment our 100 percent focus is on establishing Coffiato as the Cold Coffee brand across the country.”

In August 2015, DropKaffe raised $300,000 in seed funding.

The retail coffee market in India is estimated to be worth over US$257 million and is mainly split between Starbucks and local rival Cafe Coffee Day.

One of the biggest challenges facing coffee retailers is high real estate costs that eat into their margins. By starting off as an internet startup with no physical outlets of its own, DropKaffe avoids this hurdle altogether.