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COFE, a Kuwait-headquartered online platform for coffee brands, has raised US$15 million in a series B funding round led by Wa’ed Ventures, a venture capital firm owned by Saudi Aramco. The round also saw the participation of eWTP Arabia Capital (eWTPA), the investment arm of China-based venture capital (VC) firm eWTP Capital which is backed by Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF) and China-based e-commerce platform Alibaba Group. Three other Kuwait-based investment companies also took part in the round: Al Imtiaz Investment Group, a Shari’ah compliant investment group, KISP Ventures (KFH Capital), an early-stage Shari’ah compliant tech VC firm, and Rasameel Investment Company, a wealth management fund.
Launched in 2018 by Ali Al Ebrahim, COFE is an online marketplace for global and regional coffee companies. Having recognized a supply chain gap between local farmers, roastaries and coffee shops, Al Ebhrahim built the COFE platform using a farm-to-cup approach (which simply alludes to working directly with local/regional coffee bean farmers). Once downloaded, the COFE app thus offers its users access to a wide range of international franchises as well artisanal coffee brands through multiple premium services. And by catering to customers in Kuwait, UAE, Saudi Arabia, and Egypt, COFE has already made an indelible mark in the MEA coffee industry- a $44 billion market which is expected to grow at a compound annual growth rate (CAGR) of 7.5% until 2027 (as per a Mordor Intelligence report).
But with new capital at its disposal, Al Ebrahim believes his startup can adhere to issues that persistently stall the ecosystem’s growth. “The funding we’ve received helps us not only strengthen our current tech, but also develop features that we know will tackle existing challenges that both our users and vendors may be facing,” Al Ebrahim said, during an exclusive interview to Entrepreneur Middle East. “We want to build our platform to be a complete solution where vendors can find everything from having a customisable online store front, to rewards programs, marketing tools and even facility management. We want to help them tackle everything, so they can focus on what they do best, make that perfect cuppa.”
Al Ebhrahim adds that a portion of the funds will be especially allocated towards tailored customer experiences. “In the case of users, there is a rising preference for home brewing and specialty coffee, both things that are not always available on one size fits all platforms,” he adds. “COFE is quickly becoming a platform where all the different coffee lovers can find whatever it is that they are looking for. Lastly, with this funding round, we plan to expand and offer our services. Our aim is to strengthen our position in the MENA market, and then probably expand to the UK and Europe.”
The COFE team. Source: COFE
Of course, COFE’s inclination towards further innovation isn’t a consequence of just this particular funding round. Over the years, the platform has added other services such as coffee beans, machines and other home brewing accessories to its list of offerings. “COFE’s very inception is based out of innovation- when trends started to shift where you could see people wanting to pick up their coffee on their way to work and other commitments, just as much as they liked to sit in coffee houses, we came up with COFE which was focused on pick up,” said Al Ebrahim. “But just as we were beginning to settle in, the COVID-19 crisis happened- coffee shops and other establishments were forced to shut down, and in many places our vendors were left with zero revenue streams. This is when we started on the idea of building up on our home brewing segment. This worked both for the supplier and the consumer. So much so that we have now launched COFE Market, where we have already onboarded 107 roastaries (35 in Kuwait, 41 in KSA, and 31 in UAE). Moreover, over 110,000 product stock keeping units have also been acquired and featured on the application since 2022.”
Consistent with its ability to stay atop the latest trends, COFE has also capitalized on the worldwide growth of subscription-based services with the launch of a 30-day COFE Subscription. “As consumption habits change, COFE App is always developing technology and product-based solutions,” Al Ebrahim said. “The worldwide subscription industry has shown tremendous growth within a year and has increased from $119.4 billion in 2022 to $196.35 billion in 2023, with a CAGR of 64.4%. The 30-day COFE Subscription feature allows our users to pre-pay for their daily caffeine for 30 days, saving them time taken to order the same thing everyday and also adding more value to their money through deals, bundles and discounts. COFE is the first marketplace in the region that allows customers to subscribe to a service of this kind.”
Indeed, this innovation-driven approach has ensured consistent growth for the startup in Saudi Arabia, in particular. Soon after its move into the Saudi market in 2020, the COFE app was listed as one of the Top 10 Most Downloaded Food Delivery and Restaurant Apps (2021) in the kingdom in a survey conducted by the Communication and Information Technology Commission (CITC). COFE was also chosen as the official partner of Riyadh Season 2022, an annual pop culture festival held in the capital city. But it was a partnership with the PIF-backed Saudi Coffee Company -which resulted in a $319 million investment that will be used to develop the national coffee sector over the next decade- that led to COFE being recognized by the Saudi Arabian investment landscape. “Our mission is to advance sustainable innovation within emerging tech segments in the Kingdom,” Fahad Alidi, Managing Director at Wa’ed Ventures said. “The founding team at COFE app, supported by its cutting-edge platform, will disrupt a multi-billion-dollar market fueled by a nation-wide initiative supporting its growth for years to come. We look forward to backing COFE’s growth as it continues to lead the digitalization of farm-to-cup consumerism across the region.”
Veteran Chinese entrepreneur and eWTPA founder Jerry Li shared similar sentiments when commenting on why his enterprise was keen on partaking in COFE’s Series B funding round. “We partner with like-minded entrepreneurs and support the growth of promising businesses in the GCC region,” Li said. “We believe our investment, combined with strategic assistance, will provide COFE with resources to scale and grow. Our investment is a testament to our commitment to promote innovation in the region.”
Al Ebrahim, on his part, remains committed to his mission to keep reimagining the regional coffee market. “From marketing tools that enable its vendors to streamline their ad budgets to providing maintenance solutions and eventually the ability for retail chains to buy beans directly from the local farmer, COFE is on its way to become the complete farm-to-cup solution,” he reveals. “With regards to the farm-to-cup approach, we, at COFE, are aspiring to be more than just a logistics brand. We connect all kinds of COFE producers to COFE consumers, whether it is through international franchise brands, local coffee roasters or the farmers.”
This article is from Entrepreneur.com
