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A year and a half ago, restaurant software maker Toast laid off nearly half its workforce and furloughed another 12% as stay-at-home orders razed the industry it served. Its valuation was $5 billion and looked like it might never climb higher.
On Wednesday, the company went public via an initial public offering, and investors gave it a $31 billion-plus price tag, valuing it higher than established companies like e-commerce marketplace Etsy ($27 billion) and homebuilding giant Lennar ($30 billion).
The restaurant industry as a whole struggled in the pandemic, with sales down $240 billion in 2020 from expected levels. But even so, Toast, the maker of payments and ordering software for the food-service industry, grew its overall revenue 24% to about $823 million in 2020. (Its losses also grew, by 18% to $249 million.)
Diametric to early expectations, Toast did get a boost from the pandemic: Restaurants needed more tech as in-person dining petered out. They rushed to the likes of DoorDash and Grubhub as a result, as well as Toast. And as restaurants grew increasingly angry at third-party delivery companies over their pricing, Toast, which offers a way for companies to create their own ordering platform, benefited from their annoyance. Beyond those macroeconomic factors, Toast also moved fast to meet demand. One factor that may have also helped with adding new customers: The company offered its software for free to restaurants, even those new to Toast, early in the crisis in response to the economic fallout.
“Acquiring locations and trust is the biggest challenge,” CEO Chris Comparato said to Term Sheet.
While many products were already in development when COVID struck, the pandemic boosted the importance of the contactless restaurant tech that’s in Toast’s wheelhouse. That tech includes QR codes that can be scanned via phone to show a menu, or ones that can be used by customers to complete an order and pay from the table—lowering the need for servers.
That last point is of increasing importance: Servers are in low stock at the moment, even post-pandemic, and restaurants are looking to fill the gap with tech.
“A lot of these restaurants found themselves really short on labor and found it hard to serve,” says Kent Bennett, a partner at Bessemer Venture Partners and a member of Toast’s board. Toast’s tech “gives them more ability to serve their guests.”
That doesn’t mean servers are not in the future of restaurants: While restaurant chains like Sweetgreen appear to be leaning into robotics, Toast sees that as a more far-out technology, though one the company is keeping an eye on. Comparato says he views Toast’s tech as complementary to servers, allowing the humans to explain a menu or chat up diners while the phone and computer do the grunt work.
TIL: Corporate credit card upstart Brex is famous for an ad campaign that blanketed San Francisco in 2018—back when it was still a relatively unknown company. The strategy worked, with CEO Henrique Dubugras noting that its high visibility translated into greater responses to outbound sales calls. As it turns out, the company has turned that experience into part of its business. Brex has a dedicated person—Kasper Koczab—managing its out-of-home-advertising who also advises customers, many of whom are startups, on their billboard and bus ad strategy, as an added perk of giving Brex their business. If you’re in San Francisco (or Utah, for that matter), you may have noticed another startup that may well be the inheritor of Brex’s billboard fame: Clickup. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: [email protected]
Jessica Mathews compiled the IPO and SPAC sections of this newsletter.
VENTURE DEALS
- Kavak, a Mexico City-based used-car marketplace, raised $700 million in a Series E round, valuing it at $8.7 billion. General Catalyst led the round and was joined by investors including Tiger Global, Spruce House, D1, SEA, Founders Fund, Ribbit Capital, and SoftBank.
- Ocrolus, a New York City-based maker of a system to analyze financial documents, raised $80 million in Series C funding. Fin VC led the round, valuing Ocrolus over $500 million.
- Ripple Foods, a Berkeley, Calif.-based plant-based dairy alternative, raised $60 million in Series E funding. Rage Capital, Ajax Strategies, and S2G Ventures invested along with OurCrowd, GV, Prelude Ventures, Euclidian, Fall Line Capital, and Tao Capital Partners.
- Iron Ox, a San Carlos, Calif.-based sustainability-focused agtech robotics maker, raised $53 million in Series C funding. Breakthrough Energy Ventures led the round.
- Centivo, a Buffalo-based maker of a health plan for self-funded employers, raised $51 million in Series B1 funding. B Capital Group and Maverick co-led the round.
- ZestMoney, a Bangalore-based buy-now-pay-later company, raised $50 million from Australia’s Zip.
- Bigeye, a San Francisco-based maker of data quality monitoring tech, raised $45 million in Series B funding. Coatue led the round and was joined by investors including Sequoia Capital and Costanoa Ventures.
- Panorays, a New York City-based security risk management company, raised $42 million in Series B funding. Greenfield Partners led the round and was joined by investors including Aleph and Oak HC/FT as well as new investors BlueRed Partners, Greenspring Associates, and Moneta VC.
- Meru Health, a San Mateo, Calif.-based online mental health company, raised $38 million in Series B funding. Industry Ventures led the round and was joined by investors including Bold Capital Partners, Freestyle VC, FMZ Ventures, and Leksell Social Ventures.
- Blue White Robotics, a Israel-based agriculture robotics company, raised $37 million in Series B funding. Insight Partners and Entrée Capital led the round.
- Misfits Gaming Group, a Boca Raton, Fla.-based e-sports gaming company, raised $35 million . The E.W. Scripps Company led the round.
- Loyal, a San Francisco-based dog longevity drug developer, raised $27 million. Khosla Ventures led the round and was joined by investors including First Round Capital, Box Group, Collaborative Fund, The Longevity Fund, and Lachy Groom.
- 1build, a Los Angeles-based construction-cost estimation software maker, raised $19.5 million in Series A funding. Greycroft Capital led the round.
- Calyxia, a Paris-based maker of green microcapsules, raised €15 million in Series A funding. Astanor Ventures led the round.
- GrowthSpace, a New York City-based maker of talent development programs, raised $15 million in Series A funding. M12 and Vertex Ventures led the round.
- Cloudsmith, a Belfast, U.K.-based supply chain management company, raised $15 million in Series A funding. Tiger Global led the round.
- Vyne, a London-based payments platform, raised $15.5 million in seed funding. Investors included Hearst Ventures, Entrée Capital, Triplepoint, Seedcamp, Venrex, Founder Collective, and Partech.
- Fittr, an India-based health and fitness community, raised $11.5 million in a Series A funding round. Dream Capital and Elysian Park Ventures led the round.
- Osano, an Austin-based risk and compliance startup, raised $11 million in funding. Jump Capital led the round and was joined by investors including LiveOak Venture Partners and Next Coast Ventures.
- Awning, a San Francisco-based real estate investing website, raised $9.3 million. Global Founders Capital led the round and was joined by investors including MassMutual Ventures.
- Vinterior, a London-based marketplace for curated vintage furniture and home accessories, raised 8 million pounds in Series A funding led by Active Partners.
- FruitScout, a Yakima, Wash.-based agtech software maker, raised $4 million in seed funding. Bowery Capital and TFX Capital led the round and was joined by investors including SaaS Ventures.
- UBCO, a New Zealand-based electric motorbike company, raised $10 million in series B funding from Jubilee Glory Investments.
- Thoughtful Automation, a Chicago-based automation company, raised $5 million in seed funding. Drive Capital led the round.
- Recycleye, a London-based maker of robotics to increase recycling, raised $4.7 million in seed funding. Promus Ventures led the round and was joined by investors including London's Playfair Capital, Creator Fund (part of Founders Factory), and MMC.
- Agtonomy, a San Francisco-based agtech company, raised $4 million in seed funding. Investors include Grit Ventures, GV (formerly Google Ventures), and Village Global.
- RemNote, a note-taking app maker, raised $3 million. General Catalyst led the round.
- Dogdrop, a Los Angeles-based dog care company, raised $2.9 million in funding led by Fuel Capital. Other investors include Mars PetCare, Muse Capital, Animal Capital, Gaingels, and The Helm.
- Cabinet, a New York City-based executive assistant software maker, raised $2.6 million. Harlem Capital led the round and was joined by investors including Good Friends Capital and Parade Ventures.
- Climatiq, a Berlin-based startup focused on reducing carbon emission, raised $2 million in pre-seed funding . Cherry Ventures led the round.
- Boddle Learning, a Tulsa-based gamified math education company, raised $1.4 million in pre-seed funding. Ateno Capital led the round and was joined by investors including Lightship Capital, Cortado Ventures, Scout Fund, KC Rise Fund, Next Wave Impact, Pharrell’s Black Ambition, and Google’s Black Founders Fund.
- Book Salon, a Finnish payment and booking service provider focused on hair, beauty, and wellness companies, raised €1 million ($1.2 million) in funding. Big Bets VC led the round and was joined by investors including Sontek Ventures.
PRIVATE EQUITY
- Granite Creek Capital Partners and Equivu Capital invested in C&C Manufacturing, an Ottumwa, Iowa-based manufacturer and distributor of heavy equipment. Financial terms weren't disclosed.
- Threshold Brands, backed by The Riverside Company acquired Sir Grout, a Cumming, Ga.-based grout and tile company. Financial terms weren't disclosed.
- Welsh, Carson, Anderson & Stowe acquired Argos Health, a provider of complex claims services for health systems. Financial terms weren't disclosed.
EXIT
- Procore (NYS:PCOR) will acquire Levelset, a New Orleans-based construction payments company backed by Brick & Mortar Ventures, Altos Ventures, S3 Ventures, and Horizons Ventures, for about $500 million in cash and stock.
- Sendinblue, backed by BlackRock, acquired Chatra, Metrilo, and PushOwl, three e-commerce marketing companies, for more than $47 million.
- CreatorIQ acquired Tribe Dynamics, a San Francisco-based influencer marketing analytics platform backed by DGNL Ventures. Financial terms weren't disclosed.
OTHER
- The Department of Justice is reviewing Zoom Video Communications proposed $15 billion deal to acquire Five9, the cloud-based call center.
- DraftKings offered to acquire Entain, a U.K.-based online gambling group, for $22.4 billion.
- Serum Institute of India will invest 50 million pounds ($68 million) in Oxford Biomedica, a British producer of the AstraZeneca Covid-19 vaccine.
IPO
- Dongguan Rural Commercial Bank, one of China’s largest banks, raised $1.2 billion in an offering of 1 billion shares in Hong Kong, per Bloomberg.
- Oyo Hotels & Rooms, a budget hotel marketplace in India, is planning to file for an IPO in the country next week that could raise around $1 billion, according to Reuters. SoftBank and Microsoft back the firm.
- Oxford Nanopore, an Oxford, UK-based rapid COVID test producer, is planning to raise up to $649 million in an IPO in London, according to Bloomberg. IP Group, Temasek, Nikon, and Wellington Management back the firm.
- Remitly Global, a Seattle.-based remittance company, raised $523 million in an offering of 12 million shares priced at $43 per share—it had previously planned to price shares at up to $42 per share. The company posted $257 million in revenue in 2020 and a net loss of $32.6 million. PayU Global, Threshold Ventures, and Trilogy Equity Partners back the firm.
- EngageSmart, a Braintree, Mass.-based customer engagement software company, raised $378 million in an offering of 15 million shares priced at $26 per share—it had previously planned to price shares at up to $25. The company posted $146.6 million in revenue in 2020 and reported a net loss and comprehensive loss of $6.7 million. Summit Partners backs the firm, and General Atlantic holds a majority stake.
- Sterling Check Corp., a New York City-based background check company, raised $329 million in an offering of 14 million shares priced at $23 per share—it had previously planned to price shares at up to $22. The company generated $454 million in revenue in 2020 and reported a net loss of $52.3 million. Goldman Sachs backs the firm.
- Sovos Brands, Louisville, Colo.-based consumer food brand company, raised $280 million in an offering of 23 million shares priced at $12 per share—it had previously planned to price shares at up to $16 per share. The company posted $560.1 million in revenue in 2020 and net income of $10.8 million. Advent International backs the firm.
- Argo Blockchain Plc., a London-based clean energy crypto mining company, raised $113 million in an offering of 7.5 million ADSs priced at $15 per ADS. The company posted $26.2 million in total revenue in 2020 and a $5.4 million in gross profit. The Amplify Transformational Data Sharing ETF (BLOK) is invested in the firm.
- Brilliant Earth Group, a Dover, Del.-based sustainable jewelry company, raised $100 million in an offering of 8 million shares priced at $12 per share—it had previously planned to sell 17 million shares priced at up to $16. The company posted $251.8 million in net sales in 2020 and net income of $21.6 million. Mainsail Partners backs the firm.
- Thorne HealthTech, a New York City-based personalized wellness company, raised $70 million in an offering of 7 million shares priced at $10 per share. The company posted net sales of $138.5 million in 2020 and a net loss of $4 million. Mitsui Group and Kirin Holdings back the firm.
- Lucid Diagnostics, a New York City-based chronic heartburn diagnostics technology company, filed for an initial public offering. The company reported a net loss of $8 million in 2020 and has yet to post significant revenue. Medical device company PAVmed and Case Western Reserve University back the firm.
F+FS
- Ara Partners closed Ara Fund II with about $1.1 billion.
PEOPLE
- CoinFund, a crypto and blockchain investment firm, appointed David Pakman as managing partner focused on growing its growth-stage chops. Pakman was previously at Venrock.
- Relay Ventures, a Canadian venture capital investor, added Horace Dediu as a partner.
- Quiet Capital, a New York City-based early-stage venture capital firm, named Astasia Myers as a partner focused on enterprise. She was previously at Redpoint Ventures.
