Sleepy Owl, a ready-to-drink coffee brand, has secured a $6.5 million funding round. While the Series A funding round was led by existing investors Rukam Capital with participation from DSG Consumer Partners. Dexter Capital acted as the exclusive financial advisor for this round.
The Delhi-based D2C brand, in a statement, said, it plans to use the proceeds to expand its core team, strengthen its marketing operations, as well as expand its distribution network across India, as demand for its products has surged.
The company, which was founded by Arman Sood, Ajai Thandi, and Ashwajeet Singh in 2016, seeks to generate Rs 60 crore in annual revenue by March of next year. Sleepy Owl’s product offering includes brew packs, brew boxes, ground coffee, hot brew bags, ready-to-drink cold brew bottles, and a range of options.
Since its inception, the company has transitioned to large size modern trade outlets to carry consumer trials. Consumers and investors appreciate Internet-first brands since they fulfill a gap in the market for mid-to-premium prepackaged foods and beauty and personal care products.
The pandemic has sparked interest in products that can mimic out-of-home food and beverage experiences at home. The pandemic, according to Ajai Thandi, co-founder of Sleepy Owl, allowed the company to re-prioritize. He also noted, “We were agile and quick on problem-solving, and were able to get back on track with higher numbers…we plan to utilize the funds to go deeper into our existing retail markets across India and add as we grow.”
Sleepy Owl Coffee has more than 1,700 stores spanning Delhi NCR, Chandigarh, Mumbai, Indore, Pune, Bhopal, and Jammu, among others, and has served over 60,000 consumers. The company plans to capitalize on India’s evolving coffee culture by selling its products on its own website as well as through third-party online channels such as Amazon and BigBasket.
The global coffee industry was valued at $102.02 billion in 2020, and it is expected to increase at a compound annual growth rate (CAGR) of 4.28 percent within the subsequent five years, according to the startup. Sleepy Owl recently introduced a product subscription service.
The coffee market in India is primarily dominated by Major companies like ITC Ltd., Nestle, and Hindustan Unilever Ltd. These brands sell coffee in powdered form, which is designed to be simple to prepare. Consumers, on the other hand, are willing to pay for formats that are distinctive from what is generally available on the market as they demand better experiences.