Why are Sequoia India, Jay-Z and Serena Williams investing in this Indonesian Coffee Shop?

Singapore, Mar 9 (ANI): If you are in Jakarta and are craving your caffeine fix, you now have a new, exciting and better money-for-value option.

Kopi Kenanganis the new kid on the block taking on long-established names such as Starbucks, Coffee Bean, McCafe, and Dunkin' Donuts. It was started in 2017 by CEO Edward Tirtanata and in just two years has 230 stores in 18 cities and employs over 1,800 staff. The non-franchise chain claims to serve more than 3 million cups of beverages every month.

When he started, Tirtanata identified a gap in coffee offerings in Jakarta, with street-side stalls selling instant coffee for IDR3,000 (about USD0.20) and the higher-end international coffee chains selling imported gourmet coffee from IDR 40,000 (USD 3.00) to anywhere north of that. So, he sourced for good quality locally produced coffee, milk, and sugar and targeted a selling price somewhere in between.

Jakarta, the capital city of Indonesia is the burgeoning middle-class hub of Southeast Asia. Indonesia has over 52 million people, middle-income earners, according to the World Bank - individuals with disposal incomes of between USD85 to USD 425.

Indonesia with a population of 270 million is the largest economy in Southeast Asia. A diverse island nation with some 300 ethnic groups and the world's tenth-largest economy in terms of purchasing power parity. GDP per capita has risen at a remarkable average annualised rate of 5.6 percent since 1967. The World Bank reported that per capita GDP in Indonesia was USD 823 in 2000 and it expanded to USD 3,932 in 2018.

In the past 15 years, the middle class has swelled from around seven percent of the population to20 percent, with another 115 million aspiring middle-class citizens in the wings. In Indonesia, the aspiring middle class are considered as people who have not yet achieved economic security with spending ability of between USD 37 to USD 85 a month.

Consumption accounts for about 56 percent of GDP in Indonesia which is relatively high for an emerging economy. Furthermore, with the middle-class is concentrated in Jakarta, there are ample opportunities to tap the spending power of this group of people and those that aspire to this level of income.

It was with all these in mind that Tirtanata pulled together fellow founders, James Prananto and Cynthia Chaerunnisaand invested 150 million rupiah (USD 10,500) to start the coffee shop business in spite of the fact that Jakarta already had an abundance of coffee outlets.

However, through shrew identification of a consumption and pricing niche, Tirtanata successfully launched Kopi Kenangan and managed to sell 700 cups of coffee on day one. It broke even within three months.

Pricing and locally sourced ingredients were just two of their key success factors.

The menu is comprised of clever and humorous names which are a play on the company's name. For example, the best-selling and signature drink is "Es Kopi KenanganMantan" which is loosely translated as "the ice that stirs memories of your ex-girlfriend/boyfriend." It is a sweet blend of ice coffee with palm sugar and fresh milk.

Other menu items include names which can be translated as"Memories of an Ex who is getting married" and "Memories of the past".

There is also the use of technology. For the convenience of customers, they have developed an app that allows customers to pre-order their drinks and picks them up at their preferred location - a system similar to China's Luckin Coffee.

Their shops are designed fundamentally around the "grab and go" culture in a busy city - compact with a small seating area.

Following USD 8 million of seed funding, Series A of funding which concluded in June of 2019raised another USD 20 million for Kopi Kenangan. It was led by Sequoia Capital India, an arm of famed American global venture capital firm Sequoia Capital based in Menlo Park, California. Founded in 1972, Sequoiamade early-stage investments in companies like Apple, Google, Oracle and a host of other well-known brands.

Among the investors in this Indonesian coffee chain are celebrities like Jay-Z and Serena Williams who invested through their investment companies Roc Nation via its subsidiary Arrive and Serena Ventures respectively.

Neil Sirni, Arrive's co-founder and President was quoted in a press release as saying, "we are inspired by Kopi Kenangan's tenacity, vision, and ability to execute." He added, "We're excited to be an investor in and partner to Kopi Kenangan as they introduce Indonesian-style coffee to the world."

With the investments, the company plans to add more than a thousand new stores within the next two years and expand across Southeast Asia. "We want to build a legendary brand, and we're excited to work with our new investors and advisors who have built global consumer franchises spanning sports, entertainment, F & B, and technology," said CEO of Tirtanata.

"We have come a long way since our humble beginnings two years back and want to continue learning and improving our service and products to meet the expectations of our customers in Indonesia and other markets," the CEO added.