The pension giant of the Ontario Municipal Employees Retirement System made its largest investment in a Canadian technology company early on, anchoring a $ 158 million loan from Toronto restaurant software company TouchBistro Inc.
OMERS, which co-led with JP Morgan Chase a $ 72 million loan from TouchBistro in 2018, doubles by investing $ 100 million in an agreement that is also supported by Barclays, BMO Capital and RBC Ventures. The loan is believed to value the company at about $ 500 million before the cash infusion.
It is one of the largest funds of a technology startup in Canada this year and places TouchBistro, which is expected to generate revenues of nearly $ 50 million a year, for an initial public offering beginning in 2021 said the official cofounder and chief executive officer Alex Barrotti. "I would like to be the next Shopify," he said, referring to the Ottawa retail software giant that is now worth more than eBay or Twitter.
The agreement is also supported by previous investors JPMorgan Chase, Napier Park Financial Partners, BDC IT Venture Fund and Kensington Capital Partners.
Financing comes when TouchBistro expands both the breadth of its software offerings to its more than 16,000 restaurant customers, mainly in the United States, Canada, Mexico and Britain, and its global presence. The nine-year-old company began providing software for waiters to take and transmit orders on the Apple iPad table and effortlessly split bills with a swipe on the screen.
Numerous customers claim that TouchBistro technology, which has replaced the older fixed terminals offered by Micros and NCR, is easy to use, saves time and allows them to turn tables more frequently. "As an entrepreneur, I'm happy," said Jim Nichols, owner of two Crosstown Pub restaurants in the Chicago area, which recognized TouchBistro for helping him generate over $ 10,000 more in weekly revenue per location.
TouchBistro, competing with the US software that runs Square and Toast, is now positioning itself to become "the restaurant's operating system," said Peter Misek, a member of the board of directors. The company has signed payments for the elaboration of revenue sharing agreements with J.P.Morgan in the United States, Barclays in Great Britain and Mexico EVO Payments, which now represent 21% of recurring revenue. It offers display systems for kitchen management for cooks and reporting and analysis software for managers.
TouchBistro is looking at expansion in planning, payroll and inventory management, online orders and bookings, which expects to increase its average annual growth rate by 60 percent in the last three years to 90 over the next three years. "We will find a host of other products that will complement [the platform] and help restaurants stay in business and make more money," said Barrotti.
The agreement is a reference investment of OMERS, which was the first major Canadian institution to provide venture capital to Canadian technology startups after the credit crisis. Since then OMERS has supported some of the biggest names in the Canadian technology scene, including Shopify, Hootsuite and Wattpad.
As several Canadian technology companies have grown in size, so too have their financing needs, so OMERS decided a year ago to start its own equity equity division that could write much larger checks for downsizing companies.
"This is usually when we would have taken a step forward and we would have started using our US networks to attract high quality [American] investors," said OMERS Ventures management partner Damien Steel. "In this case we have the advantage of having a fund very close to us here [within OMERS], so we took the opportunity to present the company to them".
Mark Shulgan, OMERS stock growth manager, said: "The fact that we have achieved this for our first [growing] investment … speaks of the belief we have in society and of the management team and what which we consider attractive and ample addressable market. "
Mr. Barrotti, born in Uruguay of Italian parents but raised in Toronto, was a teenage programmer who spent a summer connecting his school board computers and writing a program of attendance for his high school. He avoided the university to become an entrepreneur, hitting success during the dot-com boom with a company called Inex Corp. that helped merchants open e-commerce sites. He sold it for $ 45 million in 1999 and moved to Turks and Caicos, where he dabbled in various businesses.
The idea of TouchBistro was born in 2010 after a sushi restaurant owner asked Mr. Barrotti if he could find a way for the servers to transmit orders electronically from the patio to the kitchen. When Apple launched the iPad in that year, Mr. Barrotti realized that it would be the ideal tool for this task; he returned to Toronto to develop the product and launch local restaurants.
TouchBistro has grown to serve over 2,000 restaurants by 2015 when US credit card companies have been tasked with implementing chip-and-pin technology. This flooded TouchBistro with orders as restaurateurs had to upgrade their point of sale systems. The company now adds 500 to 700 customers and $ 1 million monthly revenue.