With each new high-dollar round of venture funding, it is increasingly apparent that specialty coffee subscription services cannot be ignored by roasters with more traditional and insular e-commerce operations.
When, shortly after receiving a $25.57 cash infusion, Blue Bottle announced it was buying the U.S.-based Tonx, the subscription-based roaster’s founder Tony Konecny was talking about expansion, development and growth on all fronts, saying in April, “Most exciting for us is that many of the ideas we’ve had for taking the coffee delivery experience to the next level — ideas that have been collecting dust on our whiteboards and in our dreams — will begin taking flight.”
Now two-year-old U.K.-based roaster/subscription service Pact Coffee has announced it has received a €2 million (approximately $2.67 million USD) Series A funding round led by MMC Ventures, existing investors Connect Ventures, Songkick founder Robin Klein and others. The latest round well exceeds another round of $668,000 secured last year, and the company has immediate growth plans, including doubling the production staff.
“I’m delighted to be announcing our Series A funding and am very proud of the calibre of investors who share in our vision of building friendships through flavour, technology and craft,” Pact Coffee founder Stephen Rapoport announced this week “The investment will be used to accelerate already exceptional growth, as well as growing our team from 30 to 50 in the UK.”
Pact Coffee doesn’t deliver outside of the UK, where the company already has some worthy competition from the likes of other established subscription providers like HasBean and Kopi, which in May was acquired by the UK coffee retailer Cafedirect. And continued investment in these kinds of companies is helping rapidly mature this young market segment in consuming countries throughout Europe, parts of Asia and the United States.
Subscription providers are getting more creative, too, focusing more on matching individual taste profiles and customized delivery options in what can otherwise be a faceless sales relationship. Similar to Pact’s buying guide questionnaire, Brooklyn, N.Y.-based multiroaster subscription provider Craft Coffee just unveiled the Coffee DNA Project, a short questionnaire that aligns consumers’ existing brand and flavor preferences from coffees with different roasters at multiple price points.
The founders of both Craft Coffee and Pact Coffee are not afraid to admit that success in the subscription arena requires some on-the-fly learning and constant feedback from customers.
“After three years of experimenting and talking with our customers, we’ve discovered how to match people with coffees they’ll love,” Craft Coffee founder Michael Horn says of the DNA program.
Says Pact’s Rapoport, “This model is not as simple as it looks from the outside; the frictionless customer experience has taken 18 months’ hard work and we are still just 5 percent of the way there.”