SpotOn Raises $300M, Acquires Appetize

SpotOn Secures $300 Million in Series E Funding and Acquires Appetize

Just last year, SpotOn was preparing to announce a $60 million Series C funding round, resulting in a company valuation of $625 million.

Now, almost a year later, the landscape for this payments and software startup has undergone significant changes.

Significant Valuation Increase

SpotOn has successfully closed a $300 million Series E financing round, establishing the company’s value at $3.15 billion.

This represents a valuation more than five times greater than that achieved during its Series C round and a substantial increase from the $1.875 billion valuation recorded in May – only three and a half months prior – when it secured $125 million in Series D funding.

Andreessen Horowitz (a16z) spearheaded both the Series D and E funding rounds.

Impressive Growth and Investor Confidence

The company reports a 100% year-over-year growth rate and a tripling of revenue over the last 18 months.

Existing investors, including DST Global, 01 Advisors, Dragoneer Investment Group, Franklin Templeton, and Mubadala Investment Company, increased their investments in SpotOn.

New investors Wellington Management and Coatue Management also participated, alongside angel investments from Douglas Merritt, CEO of Splunk, and Mike Scarpelli, CFO of Snowflake.

With this new capital, SpotOn’s total funding since its founding reaches $628 million.

Acquisition of Appetize

The newly acquired funds will be allocated to the acquisition of Appetize, a digital and mobile commerce payments platform serving enterprise clients.

These clients include venues in the sports and entertainment industries, theme parks, and zoos.

SpotOn is acquiring Appetize for $415 million in a combination of cash and stock.

Expanding Market Reach

Since its establishment in 2017, SpotOn has concentrated on delivering software and payment solutions to small and medium-sized businesses (SMBs), particularly those in the restaurant and retail sectors.

The acquisition of Appetize significantly broadens SpotOn’s reach into the enterprise market.

Appetize will operate under the SpotOn brand and focus on expanding its client base, which already includes prominent organizations like Live Nation, LSU, Dodger Stadium, and Urban Air.

Appetize's Specialized Capabilities

Currently, Appetize serves 65% of all major league sports stadiums.

The company specializes in contactless payments, mobile ordering, and menu management.

For instance, Appetize’s technology facilitates seamless and varied contactless payment options when ordering food at games or concerts, utilizing point-of-sale (POS) systems, kiosks, handheld devices, online ordering, mobile web, and API integrations.

Competition and Comprehensive Platform

SpotOn is positioned as a competitor to Square in the payments arena.

However, the company emphasizes that its offerings extend beyond basic payment processing and point-of-sale software.

SpotOn’s platform aims to provide SMBs with a comprehensive suite of tools to manage all aspects of their businesses, “from building a brand to taking payments and everything in between.”

The company strives to be a “one-stop shop” by integrating features like custom website development, scheduling software, marketing tools, appointment scheduling, review management, analytics, and digital loyalty programs.

Combined Workforce and Growth

The combined entity will employ 1,600 individuals – 1,300 from SpotOn and 300 from Appetize.

SpotOn’s product and technology team will now consist of over 500 employees, according to co-founder and co-CEO Zach Hyman.

The company currently serves tens of thousands of clients, a number that is reportedly growing by “thousands more every month.”

Strategic Acquisitions

SpotOn previously acquired SeatNinja last year and Emagine in 2018.

The acquisition of Appetize was considered a strategic move, complementing both companies’ market approaches and technology stacks, representing a “natural fit.”

Synergies and Future Outlook

“SMEs will benefit from scalable technology, including kiosks and offline modes, while Appetize’s enterprise clients will gain access to sophisticated loyalty programs and enhanced marketing capabilities,” Hyman explained to TechCrunch.

Hyman added that SpotOn wasn’t actively seeking another funding round, but the opportunity to acquire Appetize was too significant to ignore.

“We spent a lot of time together, and it was too compelling to pass up,” he stated.

Appetize's Perspective

Max Roper, CEO of Appetize, emphasized the importance of maintaining a stake in the combined business.

“We were not looking to cash out,” Roper said. “We are deeply invested in growing the business together. This is a rocketship that we are excited to be on.”

Impact of the Pandemic

The COVID-19 pandemic underscored the necessity for increased digital capabilities for businesses of all sizes.

“There has been a high demand for our services, and with the resurgence of Covid, no one is closing down,” Hyman noted. “Businesses recognize the need to install the necessary technology to operate effectively.”

Innovative Solutions

SpotOn has introduced a vaccination alert system within its reservation management software to assist consumers in verifying vaccination status for cities and states with such requirements.

Investor Confidence and Future Investment

David George, a General Partner at a16z, expressed strong confidence in the combined company.

He described the fit between the two companies as “extremely nicely” and affirmed a16z’s commitment to leading the funding round and continuing support.

Since its initial investment in May, SpotOn’s growth has “exceeded” a16z’s expectations.

Strategic Rationale and Continued Growth

“When companies are growing as rapidly organically, acquisitions aren’t essential for fueling growth,” George explained. “However, the strategic rationale here is so strong that the acquisition will only accelerate the already high growth rate.”

While the Series E funding primarily supports the acquisition, SpotOn remains dedicated to investing in its product and technology.

Looking Ahead

“This is our time to shine and invest in the future with forward-thinking technology,” Hyman told TechCrunch. “We’re considering how consumers will order beer at a Dodgers game in three years – will they stand in line for 25 minutes, or will they interact and purchase merchandise in innovative ways? These are the challenges we aim to solve.”