TouchBistro close to fi­nal­iz­ing $70-mil­lion fi­nanc­ing deal

The Globe and Mail (BC Edition) - - REPORT ON BUSINESS - SEAN SILCOFF

Sources say the agree­ment would value the restau­rant point-of-sale soft­ware provider at more than $180-mil­lion be­fore the re­ceipt of funds

Toronto restau­rant point-of-sale soft­ware provider TouchBistro Inc. is close to fi­nal­iz­ing a deal that will see it raise more than $70-mil­lion in a ven­ture fi­nanc­ing led by OMERS Ven­tures and U.S. bank­ing gi­ant JP Mor­gan Chase & Co., The Globe and Mail has learned.

Sources fa­mil­iar with the deal say it would value TouchBistro – which re­cently landed a key dis­tri­bu­tion part­ner­ship with the U.S. bank­ing gi­ant south of the bor­der – at more than $180-mil­lion be­fore the re­ceipt of funds.

Pre­vi­ous in­vestors Napier Park Fi­nan­cial Part­ners, a U.S. pri­vate-eq­uity firm, Tokyo tech­nol­ogy plat­form gi­ant Re­cruit Hold­ings Co. Ltd. and Canada’s Re­lay Ven­tures and BDC Cap­i­tal are also par­tic­i­pat­ing in the fi­nanc­ing, sources say. The par­ties signed a term sheet ear­lier this year and the deal is ex­pected to close within days. A small por­tion of the funds raised will go to em­ploy­ees or other early in­vestors, while sources say the com­pany is also con­sid­er­ing an ad­di­tional sec­ondary of­fer­ing that would see em­ploy­ees sell part of their eq­uity in the com­pany for up to $18-mil­lion in to­tal.

The deal marks the lat­est in a spate of siz­able “growth” fi­nanc­ings led by Cana­dian in­sti­tu­tions of promis­ing Cana­dian tech firms that have evolved past the startup phase and into glob­ally minded “scale­ups,” a sig­nal that the Cana­dian tech­nol­ogy and ven­ture scene is ma­tur­ing. Last week an­other Toronto-based soft­ware firm serv­ing the restau­rant in­dus­try, Rit­ual Tech­nolo­gies Inc., said it had raised US$70-mil­lion in a deal led by Cana­dian ven­ture-cap­i­tal firm Ge­or­gian Part­ners to fuel its global ex­pan­sion.

As well, ear­lier this week Breather Prod­ucts Inc. of Mon­treal, which is hop­ing to bring the shar­ing econ­omy to the of­fice mar­ket, said it raised $60-mil­lion in a deal led by the Caisse de dépôt et place­ment du Québec to ex­pand its den­sity in key global metropoli­tan cen­tres in­clud­ing New York, San Fran­cisco and Lon­don.

Founded in 2010, TouchBistro is be­lieved to be gen­er­at­ing more than $20-mil­lion in rev­enue and pro­cess­ing more than $6-bil­lion in gross mer­chant sales on an an­nu­al­ized ba­sis. It’s one of sev­eral star­tups, in­clud­ing San Fran­cisco-based Revel Sys­tems and Bos­ton’s Toast Inc., try­ing to bring new cloud-based dig­i­tal so­lu­tions to the frag­mented restau­rant busi­ness.

With the com­pany’s tech­nol­ogy, which has been de­ployed to more than 12,000 restau­rants in Canada, the United States, Bri­tain and Mex­ico – with more than 400 com­ing on­line ev­ery month – wait­ers can process or­ders and pay­ments and split bills be­tween pa­trons, us­ing iPad tablets loaded with the com­pany’s app.

TouchBistro is also hop­ing to con­vince its restau­rant cus­tomers to let it use data through the plat­form to help de­ter­mine mar­ket prices for cer­tain food and bev­er­age items in lo­cal mar­kets and bring ad­di­tional value to its plat­form.

The com­pany, led by CEO Alex Bar­rotti, is ex­pected to get a sig­nif­i­cant leg up when its part­ner­ship with Chase, an­nounced ear­lier this year, goes live some time this sum­mer. Through that deal, TouchBistro will gain ac­cess to thou­sands of restau­rants, brew­ers and other play­ers in the food-ser­vice in­dus­try who are Chase clients, and start pro­mot­ing its plat­form through more than 5,000 Chase bank branches. Chase chose TouchBistro as part of a com­pet­i­tive process among providers of restau­rant point-of­sale so­lu­tions. TouchBistro gets a rev­enue share from pay­ments pro­ces­sors for each restau­rant it signs up us­ing its plat­form. Those pay­ments, which ac­count for 15 per cent to 18 per cent of rev­enues, will in­crease to about 25 per cent with the Chase deal.

Mr. Bar­rotti de­clined to com­ment on the com­pany’s fi­nanc­ing plans.

TouchBistro is be­lieved to be … pro­cess­ing more than $6-bil­lion in gross mer­chant sales on an an­nu­al­ized ba­sis.

TouchBistro is one of sev­eral star­tups, in­clud­ing Bos­ton’s Toast Inc., try­ing to bring new cloud-based dig­i­tal so­lu­tions to the frag­mented restau­rant busi­ness.

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