India’s Vahdam Teas raises $11M to grow its tea-commerce business in the US and Europe

Vahdam Teas, an India-based e-commerce startup that sells fresh tea in international markets, has closed a new financing round as it looks to expand its presence in the U.S. and Europe.

The three-year old startup said it has raised $11 million in its Series C financing round. The round, which according to a person familiar with the matter valued the startup at about $40 million, was led by Sixth Sense Ventures. Existing investor Fireside Ventures, which has put money in a number of consumer-facing brands, also participated in the round.

Mankind Group Family office, Infosys co-founder Kris Gopalkrishnan, SAR Group Family office, Zomato co-founder Pankaj Chaddah, and Urmin Group family office also participated in the new financing round. The startup, headquartered in New Delhi and New York, has raised about $16 million to date.

The startup was founded by 28-year-old Bala Sarda, who comes from a tea industry family. Vahdam Teas operates an eponymous e-commerce platform and also works with giants such as Amazon, to sell tea directly to consumers in the U.S., Europe, and other international markets.

Vahdam Teas cuts the middlemen suppliers to reduce the time it takes to ship tea to consumers. "If you look at the supply chain for exporting from India, it's completely broken. The goods go through distributors, then sold to exporters. Somewhere in the middle, brokers show up, too. Then an importer imports the tea. It all takes months to get a supply cycle to reach consumers. Unlike wine or whiskey, tea is best when it is fresh. Its ingredients lose flavor with time," he explained.

To address this, Vahdam Teas has built a supply chain network to source tea directly from hundreds of gardens in India. It stores all the goods in its warehouses in New Delhi and then exports directly to its entities in different markets. The faster delivery of tea and better control of the supply chain is one of the key differentiating factors for Vahdam Teas.

Today about 99% of its sales comes from outside of India, said Sarda, who noted that with the new capital the startup would explore expanding its business in India, too.

But much of the fresh capital would be invested in bulking up its supply chain network and set up additional offices in the U.S. and Europe, he said in an interview with TechCrunch earlier this week. The startup also plans to launch new products and enter new markets in South Asia and UAE.

Vahdam Teas also wants to have presence in the offline (brick and mortar) market, and bring its tea to 500-700 stores in the U.S. in the coming months. "We have aspirations to become an omni-channel brand," he said.

India controls about 25% of tea production worldwide. But Indian brands almost have a "negligible presence" on the world map, said Nikhil Vora, founder and chief executive of Sixth Sense Ventures. "Vahdam is an interesting example of how a traditional business like tea can get disrupted. We're impressed with the way Bala has sought to target the global markets first and create a brand salience and market innovative ethnic Indian tea flavours," he added.

Tea is one of the biggest industries for laborers in India. Sarda said the startup donates 1% of its revenue to help these workers educate their children.