Pact Coffee, the U.K. subscription service that delivers freshly roasted “specialty coffee” to your door, has seen a change of leadership as the company plans to focus more on the B2B side of its business.
After 5 years running Pact, TechCrunch understands that founder Stephen Rapoport has stepped down from his role as CEO and instead will act as Chairman going forward. He’s being replaced by new MD Paul Turton, who has a background in B2B retail sales and management.
In a call with Rapoport on Sunday, he confirmed Pact Coffee’s change of leadership, but says he will remain a “very active” Chairman, supporting the new Managing Director. He also candidly explained that even though the startup has seen some success with its longer-running direct-to-consumer offering — having sold speciality coffee to over 300,000 U.K. households — it overestimated the size of the market for consumers who want speciality coffee delivered on a subscription basis. Instead, it is the newer “Pact at Work” B2B service where the startup is eyeing up future growth.
Rapoport sent TechCrunch the following statement:
From today I’m taking on the [role of] Chairman at Pact, having run the company as CEO for five years. The timing is perfect; the team and I have built a D2C business that is market-leading and stable. Going forward, we’re focussing on making whole teams happier and more productive by upgrading their office coffee stack – it’s called Pact at Work. I wanted to hire an MD with a long track record of winning with B2B models, which is what we have found in Paul Turton, who joins the business today. I anticipate this being a very active Chairmanship, ensuring Paul, the management team and the board have everything they need to succeed.
Launched in 2012, Pact Coffee was a noble attempt to make specialty coffee accessible to the mass market. Customers subscribe to the service — a classic e-commerce subscription play — and get freshly roasted coffee from around the world via next day delivery. The startup is unapologetically mission-driven, too, placing emphasis on giving coffee growers a fairer price.
To that end, Rapoport told me the startup has helped nurture an entrepreneurial community of over 150 coffee growers in seven countries. Last year I’m told it paid coffee growers more than double the Fairtrade rate.
Meanwhile, Pact Coffee’s investors include MMC Ventures, Connect Ventures, and Robin Klein’s LocalGlobe. In addition, a number of angels have backed the coffee startup, such as Songkick founder Ian Hogarth and TransferWise founder Taavet Hinrikus. In total, it has raised £6.4 million in four rounds of VC and debt.
Most recently, the startup took on £1 million in venture debt, following an aborted equity crowdfunding round in March 2016 and deciding not to proceed with a nearly-closed Series B round. Shortly after that decision, Pact made a number of layoffs to its workforce, and has since slashed other costs, including by moving into smaller offices.