Blue Bottle Coffee Buys Coding Talent for Next-Level Delivery
Waylan Choy stashed this in M&A
Stashed in: Coffee!
Coffee company swallows software company:
The Bay Area’s Blue Bottle Coffee and the internet’s Tonx, an online subscription coffee service, are about to blend. It means an ambitious coffee player just scored a great internet service that can help it expand its reach far beyond its retail store front presences. It’s a great fit, but also the end of an era; a signal that high-end specialty coffee is entering a new phase — one where it has to reach out to far more people if it wants to grow.
“The big picture is that we have this round of investment and money buys stuff,” says Blue Bottle founder and CEO James Freeman. Blue Bottle just raised nearly $26 million from venture capitalists and tech industry investors who normally are more focused on technology investments. The fundraising round raised a lot of questions (and eyebrows) as to why a coffee roaster would need that kind of money. Today’s news begin to answer those.
According to both Blue Bottle and Tonx, much of the deal is to get Tonx’s people and tech capabilities and use them to build a better online and cafe experience. For Tonx subscribers, nothing is going to change immediately, but within a matter of months it will be completely subsumed into Blue Bottle.
“From a service perspective everything will stay the same–the Tonx product will persist but we’ll be maintaining one brand,” says Tonx cofounder Nik Bauman. “So eventually [Tonx] will become Blue Bottle, and we’ll become the ecommerce arm of Blue Bottle.”
The San Francisco Bay Area-based Blue Bottle, along with other formerly regional roasters like Portland’s Stumptown, Chicago’s Intelligentsia, and North Carolina’s Counter Culture helped kick off a brewed coffee movement in the United States. And while all have grown beyond their original city limits, none have really threatened to become the next Starbucks, or even Chipotle. Given its recent investment round, however, along with its purchase of Handsome Roasters in Los Angeles, Blue Bottle is clearly looking to get big. Tonx immediately gives Blue Bottle a much better Web and app capability than it now has.
It’s also a good deal for Tonx, which was attempting to raise more money to purchase its own coffee roaster (it currently has a contract deal where it rents one on the weekends) and open a store front. While neither announced a price, Tonx did abandon a $4 million fundraising round it had been pursuing recently. Presumably, the deal would be on par with that. It’s a big win for the three year-old roaster that’s based in Los Angeles, but lives all over the internet.