SpotOn raises $ 125 million in 16z-led Series D, triples valuation to $ 1.875 billion – TechCrunch
Some industries have been hit harder than others by the COVID-19 pandemic, especially in its early stages.
Small businesses, including retailers and restaurants, have been negatively affected by the resulting closures and closures. They had to adapt quickly to survive. If they weren’t using a lot of technology before, they were suddenly forced to do so, as so much went digital in the past year in response to the COVID-19 pandemic. For companies like SpotOn, this was a pivotal moment.
The startup, which provides software and payments for restaurants and small businesses, has had to step up to help the businesses it serves. Not only for their own good, but his.
“We really took a close look at what was happening to our customers. And we realized we had to pivot, just so we could support them, ”recalls co-CEO and co-founder Matt Hyman. “We had to make a decision because our revenues were also affected, as were our customers. Rather than laying off staff or demanding payroll deductions, we have stayed true to our core values and continued to do our best. “
All this “branching” has borne fruit. Today, SpotOn announced they achieved unicorn status with a $ 125 million Series D round of funding led by Andreessen Horowitz (a16z).
Existing funders DST Global, 01 Advisors, Dragoneer Investment Group and Franklin Templeton also participated in the funding, in addition to new investor Mubadala Investment Company.
Notably, the round triples the company’s valuation to $ 1.875 billion from its valuation of $ 625 million at the time of its Series C raise last September. It also marks the third fundraising event for San Francisco-based SpotOn since March 2020 and brings the startup’s total funding to $ 328 million since its inception in 2017.
His efforts have also led to impressive growth for the company, which has seen its revenue triple since February 2020, according to Hyman.
Simply put, SpotOn is taking on Square in the payments space. But the company says its offering extends beyond traditional payment processing and point-of-sale (POS) software. Its platform aims to give SMEs the ability to run their businesses “from creating a brand to accepting payments and all the rest.” SpotOn’s goal is to be a “one-stop-shop” by incorporating tools such as custom website development, scheduling software, marketing, appointment scheduling, review management, analytics and digital fidelity.
When the pandemic hit, SpotOn accelerated and rolled out 400 “new product innovations,” Hyman said. He also did things like waive $ 1.5 million in fees (it’s a SaaS company, so for several months he waived his monthly fee, for example, for his integrated restaurant management system) . It also acquired a company, SeatNinja, in order to be able to expand its offering.
“Because a lot of these companies had to go digital overnight, we created a free website for all of them,” Hyman said. SpotOn has also offered commission-free online orders for restaurants and helped retailers update their websites for e-commerce. “Obviously, these companies were resilient,” Hyman said. “But such efforts have also created a lot of loyalty.”
Today, more than 30,000 companies use the SpotOn platform, according to Hyman, with nearly 8,000 of those who signed this year. The company expects that number to triple by the end of the year.
Currently, around 60% of its customers are in retail and 40% in restaurants, but the food service side of its business is growing rapidly, according to Hyman.
The reason is, according to the company, that while restaurants first rushed to add online ordering for curbside delivery or pickup, they soon realized they “wanted a more affordable solution. and more integrated “.
What makes SpotOn so attractive to its customers, Hyman said, is the fact that it offers an integrated platform that allows businesses that use it to save “thousands of dollars” in payments and fees. software from several “à la carte” suppliers. But it can also integrate with other platforms if needed.
In addition to increasing its customer base and revenue, SpotOn has also increased its workforce to approximately 1,250 employees (up from 850 in March 2020). These employees are located in its offices in San Francisco, Chicago, Detroit, Denver, Mexico City, Mexico and Krakow, Poland.
SpotOn is currently unprofitable, which Hyman says is “by choice”.
“Technically, we could have positive cash flow anytime we choose. Right now we are so focused on product innovation and the talent to exceed the needs of our customers, ”he said. “We chose the capital plan so that we could really double down on what is working so well. “
The new capital will go to further accelerate product development and expand its market presence.
“We are doubling down on our unique integrated restaurant management system,” Hyman said.
The increase marks the This is the first time that 16z has invested money in the startup, although general partner David George told TechCrunch that he knows co-founders Matt Hyman and Zach Hyman through mutual friends.
George estimates that about 80% of restaurants and small businesses use legacy solutions “which are clunky and outdated, and not very customer friendly.” The COVID-19 pandemic has led more of these companies to seek digital options.
“We believe that we are at the very beginning of the transition [to digital], and the opportunity is huge, ”he told TechCrunch. “We believe we are at the tipping point of a large technology replacement cycle for restoration and small business software, and in the very early stages of that transition to modern cloud native solutions. “
George also praised the performance of SpotOn over the past 14 months.
“There are companies that make great products and companies that can build great sales teams. And there are companies that provide very good customer service, ”he said. “It’s rare that you find two and extremely rare to find all three like we have in SpotOn.”