Cash is king for scaling startups. This is extra true in a competitive space like SMB POS where well-capitalized players like Block, Toast, and Lightspeed dominate. Plus, in today’s rapidly tightening venture market, closing a big round now is a big win.
Today, SpotOn, a five-year-old San Francisco-based POS company, sealed just such a victory, bagging a $300 million Series F round. The round, led by bigwig VC Dragoneer, gives SpotOn a $3.6 billion valuation.
Also joining the round were existing investors Andreessen Horowitz (a16z), DST Global, Franklin Templeton, and Mubadala Investment Company. Dragoneer is also an existing SpotOn investor but hasn’t led a funding round until now. New investor G Squared also chipped in.
While SpotOn says its cloud-based system can be used across categories, it seems to be focused on growing in the restaurant and retails space. The company claims its system can service businesses ranging from “local family restaurants to Major League Baseball stadiums.”
The new money comes just eight months after its Series E round. Here is how SpotOn says it will use the fresh capital.
“The new funding will support continued innovation of tools and software that focus on the success of businesses in the retail, food and hospitality sectors.”
SpotOn has about 2,000 employees. And it emphasizes its customer service as a key differentiator in the competitive POS space.
“Mom-and-pop restaurants and retail businesses are facing rapidly changing consumer expectations within today’s tech-driven landscape. SpotOn has made it their mission to provide customized solutions to drive the growth and adaptation needed as businesses of all sizes evolve and grow,” said Marc Stad, Founder and Managing Partner at lead investor Dragoneer.
Go Big or Get Sold
SpotOn has recently made several moves aimed at strengthening its hand as its battles with bigger unicorns like Toast ($6.7 billion market cap) and Block ($47.6 billion market cap). Canada’s Lightspeed is about at par with SpotOn with its $3 billion market cap.
For starters, SpotOn has added features to its restaurant solution by acquiring Dolce late last year. Dolce added a labor-management component to SpotOn’s platform, including payroll, scheduling, tip-pooling, and compliance.
The company also broadened its total addressable market by launching SpotOn Retail. It describes the solution this way. “SpotOn Retail is an omnichannel retail platform that allows independent retailers to compete with big-box stores and eCommerce giants by selling in-store, online, or on the go through one seamless, intuitive dashboard.”
And finally, the company strengthened its C-suite with three key hires. These included Lisa Banks as Chief Financial Officer, JiNa Han as Chief People Officer, and Mark Brodahl as Chief Revenue Officer.
Meanwhile, smaller players competing in a space like hospitality POS face a tough decision at some point. For example, either raise more money and scale fast. Otherwise, it’s time to capitulate and sell to the highest bidder.
That’s the scenario we witnessed this week when Italian fintech Nexi acquired the German hospitality POS Orderbird for an estimated $140 to $150 million.
So being too small doesn’t seem to be an immediate concern for SpotOn. The company does appear to have the scale and A-list venture backing needed to stay in the game. Having plenty of food in the cupboard will really matter in the coming months, given what looks like a very lean period ahead for venture funding.
