Blue Bottle Coffee, one of Silicon Valley’s favorite coffee projects, is selling a majority stake to Nestlé in a big semi-acquisition this morning that’s no doubt going to validate a lot of interest in the potential of coffee markets.

Nestlé is acquiring a 68% stake in the company, and it t looks like the leadership of the company isn’t changing as part of this deal. The Financial Times is reporting that Nestle is paying up to $500 million at a valuation north of $700 million, which we understand is in the right ballpark.

The company has opened up shops in San Francisco, New York, and Tokyo among other cities, and the experience is kind of like walking into an Apple Store. The opportunity there is that if Blue Bottle were to open up a store across from every Starbucks and acquire a customer with more value than one looking to get in and out of the shop as quickly as possible, it could potentially create a pretty substantial coffee business — even if it captured only a fraction of Starbucks’ market.

“Blue Bottle Coffee is the biggest brand in specialty coffee in America and Japan today,” Index Ventures partner Mike Volpi said in a statement. “Their success is a testament to James and Bryan’ genius and ability to create a unique sense of value that’s translated into a large, loyal following. It’s the power of the Blue Bottle brand that attracted us to invest early on, and it’s been incredibly gratifying to watch them build an enduring company.”

Coffee shops have been a favorite pet project of Silicon Valley investors, which have poured a ton of money into operations like Blue Bottle and Philz. This also isn’t Nestlé’s first big effort in coffee, as it owns the Nespresso one-shot coffee machine that’s a competitor to the Keurig, as well as the Nescafé brand. Blue Bottle has also been a prolific product producer (say that three times fast) by rolling out little cartons of its coffee and placing them in retail outlets, much like Starbucks does.

Ironically, we noted a little while back that Amazon should try picking up a coffee shop like Blue Bottle or Philz based on the market opportunity against a competitor like Starbucks and the opportunity to expand its Prime footprint. Nestlé has plenty of coffee brands in its portfolio, but a deal of this scale just shows that these coffee startups maybe shouldn’t still be treated as experiments — though they may require a well-capitalized parent (like Amazon or Nestlé) to expand to the level of Starbucks.

Independently, Blue Bottle raised more than $100 million, and we had actually heard some whispers that it might be checking into potential financing about a year ago — though, at the time, the company outright said this wasn’t happening and that it had not held any conversations with investors at any point about additional financing since the previous round. Either way, a year is quite a long time for a story like Blue Bottle to play out, which hopes to have opened 25 new cafes by the end of the year.

A representative from Blue Bottle said they would not comment on the specifics of the deal or the valuation of the company.

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