Retail technology startup Dalchini, which provides smart vending machines to hundreds of brands in India, has raised $4 million as it works to set up autonomous smart stores and vending machines in around 200 meters across the country.
The Noida-based startup offers a variety of food and beverage options from over 160 brands through its smart vending machines. These brands include various D2C players like Sleepy Owl, Slurrp Farm, Yogapulp and Yoga Bar as well as industry giants including Nestle, Mars and Dabur. The startup has tied up with companies including Bijus, Reliance, Aditya Beer Group Hindco, Vodafone, Samsung and EE and organizations including the country’s public policy think tank NITI Aayog to deploy the vending machines.
In the year Founded in 2017 by former Paytm employees Prirna Kalra and Vidya Bhushan, Daalchini operates over 850 stores across 11 states and 23 cities. In the next 12-18 months, it plans to expand to more than 50 cities and grow from 850 to 5,000 smart and independent retail locations.
Daalchini, the Hindi word for cinnamon, offers a retail-as-a-service platform that provides real-time insights into offline sales. The startup says its unique vending machine ecosystem allows brands and entrepreneurs to reach customers across the country within a week.
Daalchini founder and CEO Kalara told TechCrush in an interview that Daalchini wants to close the gaps in the Indian retail sector by leveraging existing technology and enabling people to expand their distribution offline. In contrast to markets including Japan and the US where there is one independent store for every 200 people, penetration of modern stores in India was less than 10,000 such stores, he said.
In addition to enabling brands to sell their products through smart point-of-sale solutions, Daalchini also operates a franchise model that allows people to generate revenue by setting up their own smart vending machines and building smart stores at locations of their choice.
The startup has more than 200 franchise partners with more than 800 vending machines. About 30% of all franchise partners comprise women entrepreneurs, she said.
The franchise partners own more than 98% of the vending machines, she said.
Typically, vending machines are used for items such as chips, candy, cookies, and cup noodles. Daalchini’s technology, however, allows the connected machines to serve a variety of products – including cooked meals such as the popular Indian dish rajama chawal (rice with kidney beans).
“Both perishable and non-perishable goods can be distributed through our state-of-the-art retail outlets,” said Kalra. This increases the use cases for smart retail and creates more and better business opportunities for partners who join as franchisees.
The Series A round, which includes over $876,200 in equity financing, was led by Mumbai-based early stage investment firm Unicorn India Ventures. It has also seen participation from existing investors such as Arta Venture Fund. Ajay Kaul, former CEO of Domino’s India and VSS Investco, is the investment arm of Vijay Shekhar Sharma, founder and CEO of Indian fintech Petm. Before the most recent round of funding, Daalchini had raised over $926,000.
Kalra said most of the fresh funds will go into R&D to expand the product’s use cases, including selling hygiene and personal care products. The startup sees the mobility sector as the next place to look and bring small-scale vending machines onto buses, taxis and trains.
The startup has generated revenue of more than $1.5 million in the 2022 financial year and aims to grow to more than $6 million in gross merchandise value of more than $16 million within 12 months. The startup currently has more than 40 people on its team and is hiring across multiple sectors.
“India’s retail-tech sector is undergoing a major shift from the traditional physical store format to digital, and the pace has been accelerated by the pandemic. At this stage Dalchini represents the best of both worlds with a ubiquitous physical presence backed by a robust technology framework that prioritizes the needs and convenience of its customers,” said Ruchi Pincha, Investment Associate, Unicorn India Ventures in a prepared statement.
