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$8m injection for Vend - where the money's going

Wed, 15 May 2013

No wonder Vend CEO Vaughan Rowsell has broken out his best English China to celebrate in Peter Plumley-Walker meets Wall Street fashion (right).

His company has just completed its third round of capital raising, pulling in $8 million from new investors, including MYOB founder-turned-major Xero investor Craig Winkler, Seek.com.au co-founders Matt Rockman and Paul Bassett, and two Milford funds managed by Brian Gaynor.

Vend makes cloud-based point-of-sale software and hopes it will shake up retail the same way Xero’s online software shook accounting. The idea is that instead of a cash register, you use Vend on a device like an iPad, Android table, PC or Mac.

Earlier rounds raised $3 million.

Vend founder and CEO Vaughan Rowsell had no immediate comment on the size of the new holdings, but said they were minority stakes (going into the round, Vend’s largest shareholder was Mr Rowsell and family with 40.5%, followed by Sam Morgan on 14.1% and fellow Trade Me alumni Rowan Simpson on 8.6%. Smaller investors include Berlin-based Point Nine Capital, Snapper’s Miki Szikszai and Auckland man Lance Wiggs).

NBR has been following Vend since the company consisted of Mr Rowsell (fresh from Trade Me) and a sidekick, and the only customer for their point-of-sale software was a shop run by his wife.

That was 2009. Today, Vend has 6500 customers spread across 100 countries, and 40 staff offices in Auckland (its headquarters), Melbourne and San Francisco.

Mr Rowsell tells NBR ONLINE he wants to boost staff numbers to 140 within 18 months.

Product development is also earmarked for more spending as Vend looks to move beyond its early point-of-sale focus to also covering inventory; customer relationship management; and all store related functions. As is the vogue these days, it wants to establish itself a platform.

To a degree, it’s in a race against time. When it started, Vend had only a couple of direct competitors in online retail sofware.

Today, it’s biggest two competitors are pen and paper or a cash register, Mr Rowsell says. But the company is now also seeing cloud-based retail software startups appear every couple of months.

"We're trying to scale as fast as we can and grow market share as fast as we can." 

Seen as poised for success
Sometimes sharp-tongued cloud commentator Ben Kepes gushes about the start-up.

"Vaughan Rowsell and his entire team are executing incredibly well Vend is possibly New Zealand's most successful software-as-a-service startup," he tells NBR.

"The introduction just today [in the US] of the new Square Stand in-store device* is perfect timing for cloud point-of-sale as retailers look to tie together services like location and special offers with their back office systems. Vend is perfectly poised to take advantage of this trend and is absolutely set for global success."

Doubling, tripling revenue
Mr Rowsell says annualised revenue for this year will quadruple into “the low threes” (as in $3 million). He expects that to at least double next year; it could triple to $9 million in 18 months. And that's just the start of the journey, he reckons.

Is Vend making money?
“We’ve foregone being cash-flow positive for growth,” Mr Rowsell says, taking a line from the Rod Drury playbook.

Vend is on track to become profitable in a couple of years, he adds.

New Zealand is in the midst of a mini-tech boom as Diligent and Xero surge, Orion Health circles the NZX, SLI Systems is over-subscribed and stock market minnow Snakk Media flips around in crazy fashion.

Will Vend go public
"There’s obviously a lot of buzz around listings on the NZX at the moment," Mr Rowsell says.

"It’s something we keep an open mind to, but at the moment we’re just focused on doing what we’re doing and growing as fast as we can. An IPO could be a bit of a distraction.

"At this stage, we’ve just filled up the tank again, so we’ve got enough capital to see us through the next 18 to 24 months.

"We’ll probably think about that [listing] maybe in 12 months."

ckeall@nbr.co.nz


POSTSCRIPT:

On the face of it, the Square Stand looks like direct competition for Vend (Square is the mobile payments company headed by Twitter co-creator Jack Dorsey).

I asked marketing boss Nick Houldsworth whether that's the case.

He replied: "We actually have quite a few shared customers. A number of our Vend stores in the US use Square to process credit cards. Square is very much designed around cafes and hospitality. No inventory. No connection to online retail.

"Our sweet spot is small to medium retail businesses (1 to 10 stores) with inventory, trading on multiple channels, online and offline.

"Square is more of a competitor of payment processors, like Element or Mercury, or PayPal."

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$8m injection for Vend - where the money's going
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