Sleepy Owl Coffee Pvt. Ltd, which owns a ready-to-drink coffee brand has raised $6.5 million in a Series A funding round from existing investors Rukam Capital and DSG Consumer Partners, the company said in a statement on Monday.
Sleepy Owl plans to use the funds to strengthen its core team, ramp up its marketing initiatives and enhance its distribution network across India as the company has witnessed a rise in demand for its products, the company said.
The company, founded in 2016 by Ajai Thandi, Arman Sood, and Ashwajeet Singh, has forecast an annual revenue run rate of Rs 60 crore by March next year. The direct-to-customer (D2C) coffee brand has a product portfolio of brew packs, hot brew bags, ready-to-drink cold brew bottles, ground coffee, brew box and a range of merchandise.
“The pandemic played the role of a catapult for us. It forced us to take a few steps back to aim at the target. We were agile and quick on problem-solving, and were able to get back on track with higher numbers,” said Thandi.
Sleepy Owl is taking a bet on the global coffee market which was valued at $102.2 billion in 2020 and is projected to grow at a compounded annual growth rate (CAGR) of 4.28% over the next five years, the company said.
It claims to have a more than 1,700 outlets in Delhi National Capital Region (NCR), Mumbai, Pune, Indore, Bhopal, Chandigarh, and Jammu amongst other cities. The company also claims to have catered to more than 60,000 customers. The company’s products are available on websites like Amazon and BigBasket.
“With this investment, we are confident that Sleepy Owl will get the required impetus to further scale up its business and expand operations,” said Archana Jahagirdar, managing partner, Rukam Capital.
In April 2018, the company had raised Rs 3.5 crore (around $540,000) in funding from DSG. At the time, Thandi said the capital infusion would help the firm in streamlining its operations. Sleepy Owl had further raised an undisclosed amount in March 2020 led by investment firm Rukam Capital.
“Since our first investment in 2018, the founders, have expanded their product portfolio from Cold Brew to Hot Brew bags, drip coffee formats, ready-to-drink formats, flavoured ground coffee, and have recently launched a subscription service. As it grows, Sleepy Owl is working towards making its products sustainable, reducing plastics and using paper and aluminum,” said Deepak Shahdadpuri, managing director, DSG Consumer Partners.
Dexter Capital was the exclusive financial advisor for Sleepy Owl, while Incosec Legal was its corporate compliance partner. Panag & Babu was the legal advisor for the deal.