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Vend raises $23.7 million

Who's onboard; the IPO chestnut; boss's comments on revenue.

Wed, 26 Mar 2014

The two techs I'd most like to see on the NZX, Vend and Orion Health, are also the two least likely to list in the immediate future.

They're both doing just fine from organic growth, and private equity raising - and Vend's latest success with the latter has probably just pushed the possibility of an IPO even further over the horizon.

This morning, Vend revealed* it has raised $US20 million ($NZ23.7 million) from Australian-based investment firm Square Peg Capital and the US-based Valar Ventures, the investment vehicle of Peter Thiel - the billionaire early investor in PayPay, Facebook and (after a  nudge toward NZ from the taxpayer-backed NZVIF) our own Xero.

Square Peg (which already held a 3.72% stake) and newcomer Valar now hold around 20% of Vend, CEO and founder Vaughan Rowsell says. Existing shareholders saw their holdings diluted by around a quarter, he says - implying a total private equity value not far shy of $US100 million.

Previous funding rounds raised $NZ3 million (in May 2012) and $NZ8 million (in May 2013). In late 2013, Rowsell told NBR most of the money was still in the bank.

Investors include Sam Morgan (who was first on), Lance Wiggs, Rowan Simpson, Michael Koziarski, the Berlin-based Point Nine Capital, MYOB founder and Xero director Craig Winkler, co-founders Paul Bassett and Matt Rockman, and The Milford Active Growth Fund.**

Vend makes online point-of-sale software - allowing a cash register to be replaced by a tablet, or any other device that can access the cloud.

There's a lot we don't know about Vend.

This morning, when contacted by NBR, Rowsell wasn't willing to share any revenue or profit/loss details, or how many of the 10,000 stores in 100 countries using Vend are paying for the product (at least he has the excuse his company is privately-held. I'm assuming that if Vend does ever list, it'll be upfront about its books, and not use reverse-listing nonsense to avoid issuing a prospectus or any financial details, but I digress).

The CEO did offer, "We continue to grow revenues 200% year-on-year and we are focusing on continued growth for the long term. The $250 million tops us up with still a large chunk of what we raised last time in the bank, and releases the wheel clamps on more rapid growth globally."

Boss implies revenue of $9m to $12m
In May last year, Rowsell told NBR that revenue was in "the low 3 millions", and set to "triple or quadruple" in the 12 months ahead; a 200% to 300% growth rate that implies $9 million ot $12 million revenue today if everything panned out. And while Rowsell is not providing any detailed update today, presumably things are looking pretty solid if Thiel & co are coming onboard.

Any update on if, or when, they'll be an IPO?

"I am definitely not ruling out a future raise in whatever form it may take, as long as there is a monster opportunity I want us to go after it as fast as we can. If anyone wants to help us, we are hiring."

Staff numbers have more than tripled over the past year from around 30 to around 100, with most in Newmarket, Auckland but satellite offices in Toronto and San Francisco.

Rowsell says staff will double over the next 12 to 18 months (try your luck here).

This year the company plans to open a London office, and expand its partnerships with PayPal, Xero, Stitchlabs (multi-channel inventory management), Swarm (in-store customer analytics) and SelfPay (customer self-checkout).

* NZ media was informed after a brief delay to allow for US media exclusives. A couple were press release repeater sites, but the story also got picked up by The Wall Street Journal. Big shots, huh?
** Ahead of the capital raising announced today, the Companies Office listed the biggest Vend investors as members of the Rowsell family (30.19%), Sam Morgan's Jasmine Investments (11.26%), and Point Nine Capital (8.45%)
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Vend raises $23.7 million