Sashee Chandran, founder and CEO at Tea Drops
Cassie Osterman
The global market for tea bags and loose-leaf tea is $200 billion, according to Statista, which provides industry data. The industry is forecasted to grow to $318 billion by 2025.
Tea is the center of Sashee Chandran’s family gatherings. “It’s a beverage that connects me to my culture,” she said. Her mother is a Chinese immigrant and her father is from Sri Lanka. “Both of these countries have been the largest producers and exporters of tea at certain points in time.” It’s not just the tea’s taste. It is the experience of drinking it. “When tea is served, people open up and have a more honest conversation,” she said.
For Chandran, only loose-leaf tea will do. “It has a vastly superior taste,” she said. What started as an idea for a small business has grown into a consumer packaged goods (CPG) company raising venture capital to achieve its growth potential.
Her journey is one that she hopes will show others that you don’t have to be Elon Musk or Steve Jobs to start and grow a high-growth company. “You can be an ordinary person who is passionate about an idea and has the endurance to see it through,” she said. “It’s about your desire, grit, and perseverance.”
Chandran wanted to incorporate drinking loose-leaf tea at her fast paced-job at eBay, but it required equipment and time. You need a kettle to boil the water, a strainer, and five to seven minutes to steep the tea. The tea in the break room wasn’t satisfying to her.
Tea in tea bags is made from tea dust and fannings (small particles) leftover from broken tea leaves. The dust doesn’t have the oils and aroma of loose leaf tea. “Most tea bags—70% to 80%—are bleached with chemicals and have plastic particles in them,” said Chandran. The chemicals and plastic are bad for the environment, are bad for you, and add a funny taste to the tea.
Chandran searched for a tea option that met her taste standard and needs for convenience but found none. To find the taste she was looking for, she experimented with different teas at home. However, she still needed a technology that would speed up the seeping process. Bath bombs dissolved in hot water. Could she develop a tea bomb?
More experimentation led to her developing a process that uses finely ground, high-quality tea leaves and pressing them into whimsical shapes, such as stars, hearts, and flowers. Within 15 seconds of being dropped in hot water, she had the taste of steeped tea. Chandran named the company Tea Drops.
A visit to SCORE—the nation’s largest network of volunteer, expert business mentors—resulted in some great advice from a retired lawyer and an offer to help. The former lawyer advised Chandran to patent the process of making Tea Drops. Writing a patent application can be very expensive—$15,000 to $20,000—she commented. Chandran didn’t have that kind of money. If she wrote the provisional patent, the lawyer offered to review it. Over the course of two weekends, she researched tea patents and drafted hers.
Chandran started selling Tea Drops at farmer markets. Working a day job for eBay, then weekends and evenings for herself became overwhelming. She decided to go all-in on Tea Drops and quit her day job. She financed the business using a home equity line of credit on the house she had recently bought and also used the money she saved to go to business school. Her mother came out of retirement to help, too.
The Tea Drops were made in Chandran’s kitchen and inventory was stored in her garage. Within a year, she was able to afford to rent space in a commercial kitchen.
She sold to boutique stores one by one. They liked Tea Drops’ unique packaging—a wooden box that paid homage to those used to ship tea in the 1700s. Selling door to door resulted in 500 boutique retail customers generating $500,000 in revenue.
There was a huge learning curve that year. Chandran and her small team were killing themselves working so hard.
Her entrepreneurship journey was initially pretty lonely, not knowing other entrepreneurs or people who worked in the CPG. Her network expanded, however, once she started attending the Fancy Food Show and Expo West. There, Chandran met foodpreneurs with aspirations of growing businesses that generated hundreds of millions of dollars. She learned about selling wholesale through brokers and raising money through venture capitalists.
To cut costs, she moved away from the Bay area, where rent and talent were expensive, to Los Angeles, which was much more affordable. Chandran found a co-packer to manufacture Tea Drops. Finding a co-packer was more challenging than it sounds. She had to find a co-packer willing to develop a new manufacturing process. Ultimately, she did!
Chandran didn’t come from money. With no friends and family from whom to raise capital, she sought venture capital. Chandran read Brad Feld and Jason Mendelson’s Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist to learn about the process and terminology. She read the book over and over again.
Her Rolodex didn’t include venture capitalists. To meet them, she entered pitch competitions. VCs often judge these competitions. As an extreme introvert with a fear of public speaking, she had a lot to overcome to make a compelling pitch. She honed her pitching skills by joining Toastmasters, a worldwide nonprofit that provides a forum to learn how to speak in public, then gives opportunities to practice public speaking and improve your skills.
It paid off. Chandran took first place, winning $20,000 plus $40,000 in services from the Women Founders Network pitch competition. Jesse Draper of Halogen Ventures was one of the judges and became one of the Tea Drops first investors.
Next, Chandran won $100,000 from the Tory Burch Foundation. Last year, she won first place and $50,000 in the WomanMade Funding Challenge, a partnership between Hello Alice and PepsiCo Frito-Lay.
In March 2021, Tea Drops raised a $5 million Series A funding, led by BrandProject, with additional participation from its previous investors AF Ventures, Cue Ball Capital, Halogen Ventures, and new investor Siddhi Capital. The round brings Tea Drops’ total funding to $8.4 million.
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