Singapore coffee chain raises $50m Series B
US-based VC firm White Star Capital has led a USD 50m Series B round for Singapore's Flash Coffee, an app-driven coffee chain.
Switzerland-headquartered emerging markets investor Conny & Co also participated, as did German food delivery business Delivery Hero and German holding company and venture investor Geschwister Oetker.
It follows a USD 32.8m round in June last year from White Star, Conny, DH Ventures, and Vulpes Investment Management. White Star and Conny also provided a USD 15m round in 2021 with support from DX Ventures and GFC Global Founders Capital. Rocket Internet is also an investor.
Flash offers app doorstep delivery and storefront service with 231 locations across Singapore, Indonesia, Thailand, Korea, Hong Kong, and Taiwan. Indonesia and Thailand are the dominant markets, with 92 and 90 locations, respectively. This compares to only 31 locations in total in January last year.
The concept is to broaden access to premium coffee for consumers across Asia through affordability and an app-oriented model. Coffee prices start as low as SGD 3.00 (USD 2.25), with the menu touted as curated by a regional barista competition champion. Delivery operations are supported by a partnership with Delivery Hero-owned Foodpanda.
David Brunier, Flash’s CEO, is a former CEO and chief marketing officer at Delivery Hero Southeast Asia. He also served as chief marketing officer at Foodora, another Delivery Hero-owned delivery service.
Flash recorded a 23x increase in revenue during 2021 and a 4x increase in revenue in 2022. It claims to be solidly profitable at the store level across the region, including all locations in Indonesia. The plan is to reach group-level profitability in 2024, with the first markets set to become EBITDA-positive in the near term.
Recent progress includes an entry into Bandung in Indonesia’s West Java province, its first expansion outside of a national capital city. There are now 11 outlets in Bandung. Indonesia is seen as experiencing a rapid increase in coffee consumption and has been framed as the main expansion market. There are plans to launch in Surabaya on the island of Java in July.
“Flash Coffee is well-positioned to become a leading coffee chain in the region,” Joe Wei, a general partner of White Star, said in a statement. White Star started investing in Southeast Asia in 2020 and opened its Singapore office in June last year.
Tech-savvy food and beverage outlets with rapidly growing footprints have proven attractive to private equity notwithstanding the risk of overextension.
The standout case study is China’s Luckin Coffee, which scaled to more than 5,600 outlets in the space of 18 months only to be stopped in its tracks and collapse in value in 2020 when management was discovered to be falsifying sales figures. Centurium Capital, one of Luckin’s earlier investors secured control of the company in January last year.
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