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Teabox raises $7M for its global tea-commerce business

Jon Russell

Teabox, the company pioneered the concept of selling tea to direct to consumers online, has served up $7 million in fresh funding to grow its five-year-old business.

This new infusion of capital -- last tea joke, I promise -- is a Series B round that takes Teabox, which has head offices in India and Singapore, to just shy of $15 million in funding to date. The round was led by Singapore's RB Investments, with participation from existing backers -- including Accel -- and a portion of debt funding from Singaporean bank DBS in the mix.

Newish competitor Vahdam Teas closed a $1.4 million Series A round this week, and it's been some time since we last heard from Teabox -- which closed a $6 million Series A around 18 months ago -- but that's because it has been hard at work, founder and CEO Kausshal Dugarr told TechCrunch.

"Things are going great," said in an interview. "We’ve really built the core infrastructure so we can scale 5X, 10X, 50X. Many say they want to disrupt, infrastructure should be at the source and now we are able to scale as fast as we want using the front end."

The company has now shipped over 40 million cups of tea to customers in over 110 countries, according to its website.

Teabox, for those not familiar with the company, sources teas direct from plantations in India and Sri Lanka. Hours after they are picked, the teas are vacuum packed and prepared for delivery to warehouses and then quickly on to customers worldwide.

A Teabox staff member packing the tea

That's the same model challengers like Vahdam are adopting. Teabox, however, uses a patent pending nitrogen flush storage technique that lets it package individual teabags to "protect them from oxygen, light, heat and moisture."

The process cuts out middlemen and speeds the time it takes tea to arrive with a buyer from months to days. But this is a premium product that not only tastes better than what you'll find it your local shop, it'll cost more, too. But Dugarr believes it is worth it.

As a business, Teabox isn't profitable but the company said that a number of its channels -- including Teabox.com -- are "very profitable" thanks to reasonable overheads and good margins of up to 70 percent. That means it has been able to go after new channels and development without needing to raise the kind of sums from investors that others in alternative e-commerce verticals typically require while in 'growth phase.'

The next challenge, the Teabox CEO explained, is to go beyond high-end tea enthusiasts to reach new audiences across the world.

The company has relationships with the likes of Amazon, which it sells through, but Teabox.com is its primary focus because it's where it offers a wider selection, including a subscription service, and of course it does so without sharing any revenue to a partner. Already, Dugarr said, some 15 percent of Amazon buyers will make their second purchase from Teabox.com, and the company is now experimenting with an offline presence, too.

It opened an 'experience store' in Bangalore last year where customers can sample tea in person. It also has a high-end experience in the DBS premium lounge in Changi Airport, Singapore, which is open only to the bank's top tier customers.

"Tea is a product people get to know only after they taste it," Dugarr said. "We said 'Let's go to consumers directly and see what the reaction is?'".

Admittedly it is a limited sample, but some six in ten buy the product after tasting it, he claims.

"As long as you have a great product, the only thing is getting [customers] to taste it," Dugarr added. "You have to be present where they are."

That's likely to mean that Teabox pursues new channels on- and offline in India where it sees potential to overlap with its target customers' habits, such as high-end supermarkets. But outside of India it will remain "predominantly digital" which means the company is looking at increasing its marketing and securing more partnerships.

Teabox claims to rapidly speed up time taken for tea to reach customers

China -- a huge tea market which isn't catered to from India and Sri Lanka -- isn't yet on that expansion list since it would likely require a full partnership with one retailer and investment in local logistics and warehousing with tough odds to making it.

"We think there are other more compelling opportunities before we try to figure our way into China [but] we have it at the back of our mind," Dugarr said.

Lazada, the Alibaba-owned e-commerce firm, is one such partner that Teabox is in discussions to over a sales arrangement that would give more focus to Southeast Asia.

Progress has been strong enough to merit acquisition interest. This year the company rebuffed an undisclosed global firm in the tea space that contacted Teabox with view to buying the company. He met with the suitor but ultimately Dugarr saw the interest as a validation of the potential of his business.

"There such an incredible opportunity to grow," he explained. "We feel we have a window of three to four years to grow the business and make it a big business in the premium tea space. There's no other company in that space with a dominant presence from a global perspective."