→ Editor’s note: This story was updated on May 12 after Kopi Kenangan issued a press release on its funding round.
Indonesia’s grab-and-go coffee chain Kopi Kenangan on Tuesday announced it has raised $109 million in a Series B funding round led by existing investor Sequoia Capital. The deal marks one of the largest consumer investments in the region.
The round was joined by new investors including B Capital, Horizons Ventures, Verlinvest, Kunlun and Sofina as well as return backer Alpha JWC Ventures.
In its statement, Kopi Kenangan said it plans to use proceeds from the round to strengthen its operations in Indonesia, launch new products, invest in technology to better serve its customers, and protect employees amid the COVID-19 pandemic.
“The hospitality industry is facing the biggest existential crisis of our generation,” said Kopi Kenangan co-founder and CEO Edward Tirtanata in a statement. “It’s hard to tell when the sector will return to normal but when it does, it will look very different. As a growing startup, we are adapting quickly to the challenge through contactless commerce and uncompromising hygiene standards throughout our stores.”
Kopi Kenangan currently operates 324 stores across Indonesia and plans to expand to Thailand, the Philippines, and Malaysia after the pandemic.
“F&B is one of the largest consumer opportunities in Southeast Asia and Kopi Kenangan has built a very authentic and compelling identity among millions of Indonesians. We are looking forward to bringing the same delightful experience and tasty products in more categories and formats as the business expands into newer markets like Thailand, Philippines, and Malaysia post COVID-19,” said Sequoia Capital vice president Rohit Agarwal.
Facebook co-founder and B Capital co-founder Eduardo Saverin will join the startup’s board as part of the investment. “I am looking forward to working closely with Kopi Kenangan and build a global brand celebrating Indonesian and Southeast Asian flavors,” said Saverin.
Kopi Kenangan’s first external funding was an $8-million seed round secured in October 2018 from Indonesia’s Alpha JWC Ventures. Its next capital injection came less than a year later when it bagged a $20 million growth funding round from Sequoia India.
The company wrapped up 2019 with a Series A extension round, roping in several investors, including Arrive, Serena Ventures, basketball player Caris LeVert, and Sweetgreen CEO and co-founder Jonathan Neman in an undisclosed round.
Raising large funding at this moment gives Kopi Kenangan invaluable liquidity at a time when the F&B space, in general, has been crippled by the market downturn brought about by COVID-19.
As a precaution to curb the virus spread, Indonesia has enacted a large-scale social distancing (PSBB) regulation, which requires all workplaces, except those in essential sectors, to be closed and implement work-from-home policies. Though food counts as one of the essential sectors, eateries and restaurants are not permitted to serve dine-in customers. Additionally, many consumers have restrained from buying non-essential food due to hygiene concerns.
The latest backing received by Kopi Kenangan indicates investor bullishness about the coffee business despite the accounting scandal at China’s Luckin Coffee, which has been under investigation after it revealed that it had uncovered $310 million in fake transactions.
Meanwhile, according to industry sources, Kopi Kenangan’s competitor Fore Coffee is currently in the market to raise tens of millions of dollars.
Founded in 2017 by Edward Tirtanata and James Prananto, Kopi Kenangan says its sweet spot lies between the high-priced coffee served at international coffee chains and the instant coffee sold at many street stalls.
Consumers can order their coffee for pick up through the Kopi Kenangan app, which the company launched in April, to avoid having to stand in a queue at one of the company’s many small pop-up and kiosk-style stores or have their coffee delivered by food delivery players such as GrabFood and Go-Food.
In terms of its products, Kopi Kenangan differentiates itself from competitors by taking on a classic Indonesian iced coffee recipe, using locally-sourced ingredients, such as organic palm sugar, which gives it a distinctly fresh taste and aroma. The company is also adding other Asian favourites to its menu, including Thai tea, bubble tea and even Teh Tarik (pulled tea), a local favourite tea served with sweet condensed milk.
The company says it turned profitable in 2019, which Sequoia had bragged was a feat for a business in its category.
Other investors to have backed tech-enabled coffee chains in Indonesia are East Ventures, Agaeti VC, Sinar Mas Digital Ventures (SMDV), and Insignia Ventures, which joined an $8.5 million funding round earlier this year for Fore Coffee.