White Star Capital leads A Round into Flash Coffee to democratize premium coffee across Southeast Asia
In our 2020 Southeast Asia Venture Capital Report, we explored the underlying macroeconomic and demographic trends that have driven Southeast Asia’s real GDP per capita to grow four times faster than the world average, leading to a large, rapidly growing affluent middle-class and thriving tech ecosystem [1].
These attractive fundamentals in Southeast Asia led to our first investment in the region in 2020, the $18m Series B of Pop Meals (formerly known as Dahmakan), a Malaysian food delivery platform focused on using a tech-enabled approach to target the mass-market — “popular meals at even more popular prices”.
Our conviction rests on the rising tide of young consumers who are increasingly drawn to more modern, trendier lifestyle brands that provide premium and personalized experiences. The dramatic shift to online spending over the past year has also highlighted the importance of speed and convenience in serving this demographic of consumers.
One particular product gaining popularity amongst the rising middle-class workforce in Asia is coffee. The expansion of Starbucks and other international chains has gradually drawn more interest from locals, though per capita coffee consumption in Asia is still two to four times lower than that of Europe but rapidly increasing [2]. In Asia, coffee is strongly associated with modern, globalized lifestyles, yet many consumers have not adopted the beverage as part of their daily routine. The key obstacle is that many of the existing chains are far too expensive.
Enter Flash Coffee
In late 2019, co-founders, David Brunier and Sebastian Hannecker, partnered to bring their passion for coffee to a wider audience in Southeast Asia and soon after opened their first store in Indonesia at the start of 2020. About a month after opening, the COVID-19 pandemic started spreading through the world and put a damper on the initial rollout plans. It was right in the midst of this context that Sanjay Zimmermann, a Principal at White Star Capital, was introduced to David who laid out an ambitious plan to open 50 stores over the next 12 months and leverage technology and delivery to achieve store profitability through the pandemic. The White Star Capital team closely followed the progress of Flash Coffee in the months to come and by the beginning of 2021, was highly impressed by the team’s drive and their ability to execute despite this major headwind. At that time, the company was on track to reach their original target store count with locations in Indonesia, Singapore and Thailand.
White Star Capital’s Second Investment in Southeast Asia
Flash Coffee aims to become one of Asia’s leading coffee chains by combining a creative menu with affordable prices and integrated technology. Their small format, grab-and-go stores are catered to the growing population of coffee enthusiasts who value quality, convenience and affordability.
The company digitizes today’s offline-dominated coffee industry with a consumer app that boasts a streamlined pick-up feature, sophisticated loyalty programme, personalised promotions and interactive challenges as well as a dedicated barista app that improves operational efficiency and enables performance-based incentives for baristas, ensuring an unparalleled customer experience. As former CMO of foodpanda, David Brunier has also been instrumental in implementing a data-centric approach to menu optimization, equipment digitization and supply chain automation.
Flash Coffee’s product offering was conceived together with regional and world Latte Art Champions, Arnon Thitiprasert and Robby Firlian, who have become the company’s brand ambassadors. The company sources high quality Arabica rather than Robusta beans to provide a premium coffee experience at an affordable price point for the mass-market consumer. Alongside coffee options that consumers know and love, Flash Coffee also offers a selection of specialty milk and tea beverages curated for each local market.
Beyond the three markets they currently serve, Flash Coffee aims to expand into seven new countries across Asia over the next 12 months. We were therefore inspired by the drive and ambition of the founders to bring their vibrant and modern brand to consumers across the region. Their current success is owed to their online social media presence and influencer marketing — the type of branding strategy that we believe strongly resonates with the new generation of consumers across Asia.
We are excited to announce that we have led Flash Coffee’s US$15 million Series A round, alongside current investors DX Ventures (Corporate VC arm of Delivery Hero SE), Rocket Internet (via their affiliate Global Founders Capital) and Mountain Partners. Our ambition to help portfolio companies scale internationally from Series A onwards closely aligns with Flash Coffee’s strategy, and we look forward to supporting their expansion across the region.
[1] Economic Outlook for Southeast Asia, China and India 2019
[2] International Coffee Organization
About White Star Capital
White Star Capital is a global multi-stage technology investment platform that invests in exceptional entrepreneurs building ambitious, international businesses. Operating out of Guernsey, New York, London, Paris, Montreal, Toronto, Tokyo, and Hong Kong, our presence, perspective, and people enable us to partner closely with our Founders to help them scale internationally from Series A onwards.
Find out more about how we venture beyond at www.whitestarcapital.com or follow us on LinkedIn, Twitter or Facebook.
