The specialty coffee & quick service restaurant (QSR) space is set to heat up further with Third Wave Coffee—a Bengaluru-based coffee chain that’s popular with the city’s startup community—raising $35 million in new funding in a round led by private equity firm Creaegis.
Existing investors, including WestBridge Capital and Udaan cofounder Sujeet Kumar, have also participated in the round and Third Wave Coffee is now valued at around $150 million, people aware of the matter said.
Third Wave Coffee cofounder and chief executive Sushant Goel confirmed the new funding without providing any details. Creaegis closed a $426 million fund on September 20 through which it has made the investment in the coffee chain.
A new wave of coffee brands is gaining traction in Indian metros and beyond as the coffee drinking culture expands across the country. Goel said the majority of the new capital will be used to double down on store expansion in existing markets as well as to enter new cities.
“We have about 105 stores, half of which are in Bengaluru. We are looking to add another 50-60 this year across metros and tier-1 cities,” said Goel. Started in 2017, Third Wave Coffee was largely a Bengaluru-focussed coffee QSR brand but started expanding to other cities following a $21 million fundraise, as reported by ET.In recent weeks, brands such as Blue Tokai and Abcoffee have also raised new capital from investors, including actor Deepika Padukone. In January, Blue Tokai had raised $30 million from A91 Partners and others. Starbucks India and Canada’s Tim Hortons are among other major players in the space.
Third Wave Coffee is said to be on an annualised revenue run-rate of around Rs 300 crore. The company did not, however, comment on the statistic. “Most of its stores are operating profitably minus corporate costs,” a person aware of the matter said.
“We believe that the coffee-first QSR industry is one of the fastest-growing consumer categories in the country. We have grown five times through the last year and strategically expanded our footprint across the nation. Going forward, we will continue to double down on technology and product innovation to deliver a superior cafe experience across the country,” Goel added.
Besides Bengaluru, Third Wave Coffee has a presence in Mumbai, Delhi, Gurgaon, Pune, Hyderabad, Noida, Coonoor and Chandigarh
According to Goel, the company will also continue to invest in its technology through its independent app. It sells products, including its own coffee powder, through platforms such as Zomato and Swiggy as well.
“We are excited to support the management team in their next phase of growth, using a digital-first approach,” Prakash Parthasarathy, managing partner & CEO, and Nitish Bandi, partner at Creaegis, said in a joint statement.