Tea Drops raises $5m to support ongoing innovation of bagless tea offerings, increased distribution

By Elizabeth Crawford contact

- Last updated on GMT

Source: Tea Drops
Source: Tea Drops

Related tags: Tea, ecommerce

With an infusion of $5m in series A funding, the bagless tea brand Tea Drops continues to push the boundaries of tea with innovative new products that offer convenience and a unique experience that supports consumers’ evolving emotional needs.

The funding, led by BrandProject with participation from new investor Siddhi Capital and previous investors AF Ventures, Cue Ball Capital and Halogen Ventures, also will allow Tea Drops to expand its distribution and enhance its already strong e-commerce presence and operational strategies.

Born out of founder and CEO Sashee Chandran’s deep love of tea, Tea Drops​ compress finely ground tea, organic spices, dried fruit and flowers with other ingredients into small, fun-shaped tablets that can be dropped and dissolved in hot or cold water for a mess-free beverage.

The idea for the bath-bomb-esque tablets​ came from Chandran’s frustration over what to do with wet, wasteful used tea bags when drinking the beverage on-the-go or in meetings where they can’t easily be disposed. The obvious answer is to leave the bag in the mug, but this can degrade the quality of beverage – making it bitter – and still cause a mess as water wicks up the tea bag string to dampen the outside of the cup.

While the original line of Tea Drops included sugar, the brand recently launched an unsweetened product line with exclusive retail distribution in Costco and online through the brand’s ecommerce site. The line up answers consumer demand for reduced sugar options, and includes an energizing Matcha, a tension taming Rose Earl Grey and a soothing, relaxing Citrus Ginger.  

The unsweetened line builds on other recent launches during the pandemic​, including a line of bubble tea kits that emerged as the brand’s hero product of 2020. By helping consumers recreate at home the boba tea shop experience where chewy pearls of tapioca are blended with sweet – sometimes creamy – cold tea, Tea Drops was able to sell millions of dollars of boba kits and drive strong direct-to-consumer sales growth during the pandemic.

Looking forward, the brand is exploring a women’s health tea range and other products that will continue to make tea accessible and fun for all.

Fostering online community, sales key to Tea Drops’ fast growth

By partnering with BrandProject, a venture capital fund that invests in early-stage consumer brands, Tea Drops gains more than capital – it also gains direct access to a team experienced with building successful online, direct-to-consumer businesses, such as Freshly and Daily Harvest.

Although the brand has a strong presence in brick and mortar, e-commerce is pivotal to Tea Drops, which currently attributes 80% of its revenue to online sales and has cultivated an online community of more than 200,000 tea lovers. The company’s success online was called out by Shopify, which named it one of 2020’s fastest growing DTC brands with 350% year-over-year DTC growth.

This success also likely attracted new investor partner Siddhi Capital, which has deep roots in the DTC food and beverage space through its investments in Hint, Magic Spoon, Recess and Sakara.

The current fundraise brings the company’s total funding to $8.4m, building on a $1.9m seed round ​led by AccelFoods and supported by Halogen Ventures and Cue Ball Capital in 2018.  

That funding was used to build out the company’s online presence as well as increase distribution in brick-and-mortar stores, and support earlier innovations, including a line of functional Tea Sprinkles that blended unsweetened, dissolvable organic tea and adaptogen powders.

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