It was the end of a long day at a startup conference in Delhi when my colleague, Ankit, met Bala Sarda from Vahdam Teas. But despite the haze that descends while speaking with many entrepreneurs, Bala stood out. Vahdam was creating a brand of specialty teas promising freshness from farm to cup.
Our fund was looking to support entrepreneurs like Bala. Our focus was on investing in opportunities that the “next billion" in India offer as consumers and producers. One of the key upcoming sectors we were targeting was agritech and food.
When it came to food, we thought we had a robust thesis. We knew the consumers were seeking out brands that could offer convenience, with assured quality, taste and nutrition. Our belief was that companies will need close partnerships with farmers/growers to deliver on these promises. This could reduce wastage in agricultural value chains and also help build strong scalable brands. We were looking to invest in full-stack food companies—farm to factory to consumer.
We chose not to invest in Vahdam Teas—a company that today is a rising star in its category. We discussed at length whether Vahdam could sufficiently differentiate its tea sourcing as it scaled. Will it be able to change the intrinsic quality of the tea, maintain short supply-chains, maintain freshness? We thought that it would go the route of all other tea companies and not maintain a competitive edge.
As we’ve watched many entrepreneurs evolve their business, we’ve realized that often, backward integration in the food supply chain does get built —it just comes later in the growth story. The need for reliability and quality is essential for a successful brand to scale. However, at the early-stage, where we invest, the need of the hour is consumer acceptance of product and a great team.
Ritu Verma is co-founder and managing partner at Ankur Capital.