Trouble Brewing at Third Wave Coffee? - Indian Startup News 214

Summary

The Indian food, beverage, and restaurant sectors are bustling with activity. Zomato is in talks to acquire Paytm's movie ticketing business, potentially integrating food sales for a dual revenue stream. Third Wave Coffee Roasters faces challenges after layoffs and financial losses, with co-founder Sujeet Kumar's heavy involvement questioned. Meanwhile, IN-SPACe launches a pre-incubation program for space startups, and Iigo's parent company debuts on the stock market with a successful IPO. Indian startups raised $176 million this week, with Umid Housing Finance leading with a $76 million Series F round.

Takeaways

• 📈 Zomato is in talks to acquire Paytm's movie ticketing business, which could potentially integrate food and beverage sales with movie tickets, enhancing revenue streams.
• 💡 Third Wave Coffee Roasters, despite raising $35 million in funding, has faced significant challenges, with over 70% of its stores incurring losses and the company burning through cash rapidly.
• 🤔 The involvement of Sujeet Kumar, co-founder of Ola and a major investor in Third Wave Coffee Roasters, has reportedly led to operational issues and disagreements among the founders.
• 🚀 IN-SPACe has launched a pre-incubation entrepreneurship program aimed at early-stage space startups and students interested in space technology, fostering innovation in the sector.
• 📊 Indian National Space promotion and authorization Center's program is a comprehensive 20-month initiative providing expert guidance to help startups and students develop their prototypes.
• 📉 Unacademy is reportedly in discussions with K12 Techno Services for a potential merger, which could provide Unacademy access to a large student base and educational technology platforms.
• 💼 Iigo's parent company, Le Travel Technology, made a successful debut on the stock market, with its shares receiving a significant premium over the IPO price.
• 💰 Indian startups raised a total of $176 million in funding this week, slightly less than the previous week's total.
• 🏆 UHFL (Umid Housing Finance Limited) secured the largest funding round of the week, raising $76 million in its Series F round.
• 🍺 New Delhi-based beer brand 'BE 91' raised $25 million, indicating the growing interest in the craft beer market in India.
• 🛍️ Bangalore-based fintech startup POP, offering cashback in the form of POP coins for UPI transactions, raised $2.4 million in its seed round, highlighting the innovation in digital payments and rewards.

Q & A

What is the current situation with Third Wave Coffee Roasters in India?

Third Wave Coffee Roasters, despite raising $35 million in funding, has faced significant challenges. The company has laid off over 100 employees and is currently experiencing losses in more than 70% of its stores. The issues are attributed to their business and management strategies.

What role did Sujeet Kumar play in Third Wave Coffee Roasters' growth and current situation?

Sujeet Kumar, co-founder of Zomato, became involved with Third Wave Coffee Roasters as an investor and later took on a significant operational role. He helped secure additional funding and expand the business but is also implicated in the company's rapid expansion at the expense of profitability.

Why is Zomato interested in acquiring Paytm's movie ticketing business?

Zomato sees an opportunity to integrate movie ticket sales with food and beverage offerings, potentially increasing revenue from both ticket sales and restaurant partnerships. This strategy could capitalize on the synergies between food and movie experiences.

How does the potential acquisition of Paytm's movie ticketing business align with Zomato's existing business model?

The acquisition would allow Zomato to offer a combined package of movie tickets and food delivery, enhancing the user experience and potentially increasing revenue from both ticket sales and food orders.

What is the significance of the pre-incubation entrepreneurship program launched by IN-SPACe for space startups?

The program is designed to support early-stage space startups and students interested in space technology, providing a 20-month platform to develop and demonstrate prototypes with expert guidance, thereby fostering innovation in the space sector.

What was the market response to Iigo's IPO, and how does it reflect on the company's business strategy?

Iigo's IPO was met with a 48.5% premium on its share price, indicating a positive market response. This reflects well on the company's 'boring' business strategy, which prioritizes steady growth over high-profile marketing.

How much funding did Indian startups raise in the week covered by the script?

Indian startups raised a total of $176 million during the week, which is slightly less than the previous week's total of $192 million.

Which company had the largest funding round among those mentioned in the script?

Umid Housing Finance had the largest funding round, raising $76 million in their Series F round.

What is the business model of the fintech startup Pop mentioned in the script?

Pop is a fintech startup that offers cash back in the form of Pop coins for every UPI transaction made using their platform. Users can then use these coins to shop on their curated e-commerce platform, similar to the model used by Cred.

What is the collaboration between the podcast 'Backstage with Millionaires' and Google Play, and what is its focus?

The collaboration involves a podcast episode featuring an interview with the founders of Programming Hub. The episode focuses on their journey in building a bootstrapped, profitable business with over 40 million students using their platform.

Outlines

00:00

📉 Third Wave Coffee Roasters' Financial Struggles

The script discusses the unexpected downturn in Third Wave Coffee Roasters' business in India. Despite raising a significant $35 million in funding, the company has laid off over 100 employees and is experiencing losses in more than 70% of its stores. The situation is attributed to management issues and aggressive expansion strategies similar to those of Zomato, led by Sujit Kumar, a co-founder of Zomato and a major investor in Third Wave. The company is now burning through cash and has about a year's runway left, with one of the co-founders and CFO, Suan Goyle, moving to an advisory role. The Cap Table report is recommended for further insights into the company's troubles.

05:01

🎟️ Zomato's Expansion into Movie Ticketing Business

The script outlines Zomato's confirmed talks with Paytm to potentially acquire its movie ticketing business, marking Zomato's largest acquisition since Blicket. The move is speculated to be a strategic expansion into the ticketing sector, leveraging Zomato's existing food delivery service to offer bundled movie and food deals. The potential acquisition could increase Zomato's revenue through ticket sales and associated food orders, mirroring the successful business model of Indian theater chains like PVR Inox. The script also mentions Zomato's previous acquisition of Blicket and its current profitability, as well as the company's investment in its live events and ticketing business, Zomato Live.

🤝 Unacademy and K12 Techno Services' Potential Merger

The script touches on unconfirmed reports of Unacademy being in talks with K12 Techno Services for a potential merger. If the deal goes through, it could result in a joint venture with equal stakes for both companies. Unacademy has previously invested in K12 Techno Services, and such a merger could provide Unacademy with access to over 75,000 school students and a full-stack education content and technology platform serving more than 900 educational institutions. The news is speculative, and no official confirmation has been provided by either company.

🚀 IN-SPACe's Pre-Incubation Entrepreneurship Program

The Indian National Space Promotion and Authorization Center (IN-SPACe) has launched a pre-incubation entrepreneurship program aimed at early-stage space startups, defined as companies established on or after July 1, 2022, and students interested in space technology. The 20-month program is designed to support the ideation, innovation, and prototype demonstration of space technology startups with expert guidance. Interested individuals can find more information about the program through a provided link in the video description.

📈 Iigo's Successful IPO and Market Performance

The script reports on Iigo's parent company, Le Travenues Technology, which was listed on the stock market at 138.4 rupees per share, receiving a 48.5% premium over its IPO price of 93 rupees per share. The company closed its first day at 165.7 rupees on the NSE and 161.5 rupees on the BSE. Iigo has been described as a 'boring' business by its co-founder Ranesh Kumar, but its steady growth over 18 years and successful IPO indicate that such a business model is well-received by the market.

💰 Indian Startups' Funding Roundup

The script provides a roundup of funding raised by Indian startups in a week, totaling $176 million, slightly less than the previous week's $192 million. Key funding events include UHFL's $76 million Series F round, Be 91's $25 million raise, Ragin's $15 million funding with participation from Ki and Brand Invader, fintech startup Pop's $2.4 million seed round, Prosper.io's $1.55 million pre-seed round, vegan ice cream brand GoZero's $1.5 million pre-Series A round, and generative AI startup AA's $1.5 million seed round. The script also mentions a podcast collaboration with Google Play, featuring an interview with the founders of Programming Hub, who have built a profitable, bootstrapped business with over 40 million students using their platform.

Keywords

💡Zomato

Zomato is an Indian online restaurant discovery and food delivery platform, which is central to the video's discussion about business developments in India's food and beverage sector. In the script, Zomato is mentioned as being in talks to acquire Paytm's movie ticketing business, indicating Zomato's expansion beyond food into entertainment and ticketing services.

💡Third Wave Coffee Roasters

Third Wave Coffee Roasters is an Indian coffee company that had raised significant funding but is now facing challenges. The company is highlighted in the script as an example of a startup that, despite initial success and high expectations, has encountered difficulties, including layoffs and financial losses, which is a key point in the narrative about the unpredictability of startup success.

💡Funding Round

A funding round refers to the process of raising capital from investors. In the context of the video, Third Wave Coffee Roasters had raised $35 million in a funding round, which is a significant event in the life cycle of a startup and is often a measure of investor confidence and the potential for growth.

💡Layoffs

Layoffs refer to the termination of employment for a group of employees. The script mentions that Third Wave Coffee Roasters laid off more than 100 employees after their major funding round, illustrating a common challenge startups face when financial or operational issues arise.

💡Unacademy

Unacademy is an Indian edtech company that offers online learning platforms. The script discusses a potential merger between Unacademy and K12 Techno Services, which would be a significant business move in the education sector, indicating Unacademy's expansion strategy and the trend of consolidation in the edtech industry.

💡Merger

A merger is the combining of two or more companies into a single entity. The video script speculates on a potential merger between Unacademy and K12 Techno Services, which would create a joint venture and expand Unacademy's reach in the education market.

💡IN-SPACe

The Indian National Space Promotion and Authorization Center, or IN-SPACe, is mentioned in the script as having launched a pre-incubation entrepreneurship program for early-stage space startups. This reflects the government's initiative to support innovation and entrepreneurship in the space industry.

💡IPO

An Initial Public Offering (IPO) is the first sale of stock by a company to the public. The script discusses the IPO of Iigo's parent company, Le Traven's Technology, which was listed on the stock market, indicating the company's transition from private to public ownership and its entry into the public financial markets.

💡Fintech

Fintech refers to financial technology companies that use technology to improve and automate financial services. In the script, multiple fintech startups are mentioned, such as Pop, which offers cash back in the form of Pop coins for UPI transactions, and Prosper, which automates tax filings, showcasing the growing fintech sector in India.

💡Acquisition

An acquisition is the purchase of one company by another. The script discusses Zomato's potential acquisition of Paytm's movie ticketing business, which would be Zomato's largest acquisition since Blinket, highlighting the strategy of growth through acquisition in the business world.

💡Startup

A startup is a young company that is typically seeking to develop and scale its business model. The video script frequently refers to various startups, such as Third Wave Coffee Roasters and Unacademy, which are navigating the challenges and opportunities of the startup ecosystem in India.

Highlights

Zomato is in talks to acquire Paytm's movie ticketing business, which could be its biggest acquisition since Blinket.

Third Wave Coffee Roasters, after raising $35 million, has laid off over 100 employees and is facing significant losses.

Sujit Kumar, co-founder of Zomato, has become a significant individual shareholder in Third Wave Coffee Roasters and is heavily involved in its operations.

Third Wave Coffee Roasters is burning through $5 million every month, with 70% of its outlets in losses and only a year of runway left.

Zomato's potential acquisition of Paytm's ticketing business could be a strategic move to combine movie ticket sales with food delivery, enhancing revenue streams.

Unacademy is reportedly in talks with K12 Techno Services for a potential merger, which could create a joint venture with each holding a 50% stake.

IN-SPACe has launched a pre-incubation entrepreneurship program for early-stage space startups and students interested in space technology.

Iigo's parent company, Le Travenues Technology, was listed on the stock market at a premium, reflecting investor confidence in the 'boring' yet successful business model.

Indian startups raised a total of $176 million this week, slightly less than the previous week's $192 million.

Umid Housing Finance raised the largest funding round of the week, $76 million in their Series F round.

New Delhi-based beer brand 'BE 91' secured $25 million in funding.

Bengaluru-based fashion brand Ragin, with Brand Invader as an investor, raised $15 million.

Fintech startup Pop, offering cash back in Pop coins for UPI transactions, raised $2.4 million in their seed round.

Prosper.io, a fintech platform for automating tax filings, secured $1.55 million in their pre-seed round.

Mumbai-based vegan ice cream brand GoZero raised $1.5 million in their pre-Series A round.

Bengaluru-based generative AI startup AA, offering AI-driven product photo shoots, raised $1.5 million in their seed round.

A podcast collaboration with Google Play features an interview with the founders of Programming Hub, discussing their bootstrapped and profitable business model.

Transcripts

there's a surprising amount of action

happening right now in India's food

beverage and restaurant space so on the

one hand you have zato which is trying

to buy paytm's movie ticketing business

and then on the other hand it looks like

trouble might be Brewing at third wve

coffee roers and we'll talk about that

one first so just last year third wave

coffee roaster had raised a massive $35

million funding round and a short while

later the Ken published this story

titled third wave coffee is bad news for

Starbucks and a lot of people thought

that wave coffee roosters was going to

wipe out Starbucks from India but here

we are in 2024 and the reality is

completely different the company had

laid off more than a 100 employees

months after their biggest fundraiser

and today More than 70% of third wve

coffee roaster stores are in losses so

what exactly is going on at this company

well this detailed report by the cap

table shares some insights about third

wave's troubles and it all boils down to

their business and their management so

back in 2018 Ordon had raised 22 $25

million and became one of the fastest

unicorns in India and around that time

sujit gumar one of the co-founders of

Iran had started working out of this

little known coffee Outlet in bangaluru

called third wve Coffee Roasters to stay

away from all the chaos at oron's office

eventually sojet ended up investing in

this coffee business and today he's

actually the third biggest individual

shareholder after the three co-founders

of the company and that wouldn't have

been a problem if soit had just stayed a

shareholder but instead he decided to

act like a co-founder in fact here's a

quote from one of third wve coffee

roosters investors quoted in the cap

tables report the founders have very

little say in operations and it is sujit

Kumar co-founder of Ordon and an angel

investor calling all the shots the same

investor even said that soit tells

people at parties that he has built

third wve coffee roters and it's kind of

true the report says that soit played a

huge role in helping third wave coffee

roaster secure additional funding expand

to new regions and get prominent

investors soj was the one who got

Westbridge capital and cragus and these

are the two biggest investors in the

company however it looks like sujit went

about building third wave coffee

roosters the same way that he built oron

he spent a lot of money to expand

quickly and get more market share at the

cost of profitability today third wave

Coffee Roasters is burning five Cotes

every month 70% of all their coffee

Outlets like I mentioned earlier are in

losses and they only have about one year

of Runway left on top of that one of the

co Founders and the CFO of third wve

coffee roaster suan Goyle has moved to

an advisory role without giving any

reasons and if you want to dive into all

the details I would highly recommend

that you go check out the cap tables

report it's a great read all right now

moving on to the next news item here

zamato has confirmed that they are in

talks with PTM to potentially acquire

their movies and ticketing business this

would make it zomato's biggest

acquisition since blinket now a lot of

you might be wondering why zato would

want to get into the ticketing business

in the first place and pay so much for

it you might even start to think that

theend Goyle is crazy for doing

something like this in fact a lot of

people called him crazy for paying more

than 4,000 Cotes for blinket which was a

loss making business at the time but

today we call him a genius because he

successfully managed to push blinket

towards the path of profitability while

boosting its Revenue now coming back to

my original question why does zato want

to buy ptms movies and ticketing

business well honestly no one really

knows for sure but I have a couple of

ideas see According to some estimates

PTM is currently making around 300 to

350 groto bees selling movie and Live

show tickets and the thing is whenever

you're booking a movie ticket on

platforms like PTM or book my show you

simply book your ticket and then you get

out of the app you close it but zamato

sells food so think about that for a

second if zamato is selling a movie

ticket and gives you the option to buy

food and beverages along with it well I

think a lot of people will take that

option and of course when you make that

purchase zato gets a nice little cut

from both the movie ticket sale and also

from the sale of food from the

restaurant partners and obviously food

and movies are a great combination just

look at PVR Inox which is one of the

biggest theater chains in India they're

making more than 35% of their revenue by

selling food and Beverages and so I feel

like that's exactly what zamato is

trying to do here with the acquisition

of PM's movie and ticketing business in

fact zamato is already made more than 50

Cotes from selling tickets through their

own platform in FY 23 and just last week

zato even said that they'll be investing

a 100 crupes in zato live their Live

Events and ticketing business now

speaking of potential Acquisitions an

academy is in talks with K12 techn

services for a potential merger and this

company operates 90 plus Orchid schools

across the country now these reports

have not been confirmed by either of

these two companies so do take this news

with a grain of salt but if the deal

materializes the two companies might end

up creating a join Venture with each of

them having a 50% % stake in the

combined entity and according to this

end trck report an academy has already

invested in K12 techno services in fact

even 3 years back there were reports

that unacademy was going to acquire K12

techno services but at that time nothing

happened unacademy launched their first

offline Learning Center back in 2022 and

the number of students at their offline

centers has been growing consistently

then earlier this year physics Walla

went ahead and launched their own school

but this merger with K12 techn Services

could open up a lot of doors for an

Academy first they'd have access to more

than 75,000 school students to expand

their business but that's not all

because K12 techn Services also offers a

full stack education content and

Technology platform to more than 900

educational institutions as well all

right next up in the news the Indian

National Space promotion and

authorization Center also known as

inspace has launched a pre-incubation

entrepreneurship program for early stage

space startups now to be clear early

stage space space startups in this case

means companies that were established on

or after the 1st of July of 2022 but the

program is also open for students

interested in space technology as well

it's an extensive 20-month long program

which will help you ideate innovate and

demonstrate your prototype with the help

of experts so if this is something that

you're interested in you can find out

more details about this program using

this link in the description of this

video all right next up in the news

earlier this week io's parent company Le

traven's technology was was listed on

the stock markets at 138.4 rupees per

share getting a 48.5% premium on its IPO

price of 93 rupees per share on the NSE

the National Stock Exchange they closed

their first day at 165.7 to rupees on

the nsse and 161.5 rupees on the BC the

Bombay Stock Exchange and iigo is one of

those businesses that's been building

slowly out of the Limelight that most

Indian startups get in fact it took them

18 years to get to their IP and in an

interview with the ark web ranes Kumar

one of the co-founders of iigo even said

that it was a boring business but boring

is good and the stock markets clearly

agree with him all right now let's move

to the funding News segment for today's

video so this week Indian startups

raised a total of $176 million which is

slightly less than last week's $19.2

million now taking a look at some of the

companies that raised funds this week

first of all we have goodr based lending

company umid Housing Finance and they

raised $76 million in their Series F

round making it the biggest funding

round this week next we have new Dil

based beer brand be 91 and they raised

$25 million and then after that we have

Balu based fashion brand Ragin which has

v Ki as their investor and brand invador

and they raised 15 million following

this we have bangal Bas fintech startup

pop which gives you cash back in the

form of Pop coins for every UPI

transaction that you make using their

platform and you can use these coins to

shop on their curated e-commerce

platform which is kind of like cred

coins and creds Marketplace and they

raised $2.4 million in their seed round

next we have another bangaluru based

fintech platform prosper. iio which lets

you automate your tax filings and they

raised $1.55 million in their preed

round after that we have Mumbai based

vegan ice cream brand gozero and they

raised $1.5 million in their pre-series

a round and then finally we have bangl

based generative AI startup AA which

lets you create studio quality product

photo shoots without actually doing the

photo shoots by using their custom AI

model instead and they raised $1.5

million in their seed round now before I

let you guys go you should definitely

check out the podcast that we recently

made in collaboration with Google play

this is me sitting down with the

founders of programming Hub and this is

an incredible story these guys built a

completely bootstrapped profitable

business it's massive now they have more

than 40 million students using their

platform and I think you'll really enjoy

it but either way thank you so much for

watching this episode of backstage with

Millionaires and I will catch you in the

next one