As Square gears up for a public listing that may come as soon as next month, another startup that makes point-of-sale systems for restaurants and other retailers has raised a big round of funding.
Lightspeed POS, a startup based out of Canada that provides apps and other services for managing and selling inventory across both online and offline shopfronts, has picked up $61 million, money that its CEO and founder Dax Dasilva told TechCrunch it will use to expand internationally and make further acquisitions to grow its omnichannel sales model.
The Series C round was co-led by two large Canadian entities, Caisse de dépôt et placement du Québec (CDPQ) and Investissement Québec (IQ), with participation also from existing investors Accel and iNovia. It brings the total raised by Lightspeed to $126 million, after raising $35 million exactly a year ago.
The current valuation of the company is not being disclosed but after one of its competitors (and compatriots) Shopify went public earlier this year, reports suggested that Lightspeed is still short of the $1 billion mark.
But that is not to say that Lightspeed itself is small. The company currently processes around $10 billion a year in transactions from 25,000 customers across 100 countries, seeing growth of 123% over last year.
To put those numbers in context, Shopify claims $10 billion in sales in aggregate across 175,000 customers, and Square processed about $30 billion in transactions in 2014. Dasilva said that the smaller number of customers at Lightspeed speaks to the company’s focus on mid-market customers, who average around $600,000/year in revenues on its platform, typically across 1-10 physical locations but sometimes up to 50.
The company is not revealing its revenues but Dasilva says it is still in “growth mode” — that is, unprofitable and reinvesting whatever might come as a profit back into the business. Unlike some POS services, like Square’s and iZettle’s that make a large chunk of revenues from a percentage of all transactions, Lightspeed takes a different approach.
Pricing for Lightspeed’s SaaS model begins at $76/month for a single store, with the ability to add on users/ upgrade for more stores. In addition to that monthly subscription cost, retailers can add on paid extras such as the Lightspeed Webstore as well as hardware bundles, also priced separately.
Lightspeed’s history lies in serving retailers. The company, in fact, got its start as a large payments provider for Apple dealerships, before the days when Apple really took off with its own retail operation. That involved corporate sales and payment solutions that “had lots of depth,” Dasilva said. “The back end was always on a Mac.”
Fast foward to today, and the company has kept some of those learnings for other kinds of retailers, as well as expanded into other verticals. After buying Posios, a restaurant-focused POS service out of Belgium, in October 2014, Dasilva said that growth has been accelerated, with the company tapping (excuse the pun) into bigger evolutions in e-commerce that are merging offline and online offers for consumers, and businesses taking advantage of advances in cloud computing to do that.
“There is a big change in the industry and in POS systems. They are becoming a center of interest because of the changes in regulation around the world, for example because of EMV (chip-based card) payments in the U.S.,” he said. “The offline and online worlds are merging and so new cloud systems are combing to bring the best of both.”
That said, Lightspeed is really focused more on brick and mortar. Dasilva hints that it may move into doing more online. “We have an e-commerce module but we’re not doing e-commerce first,” he said.
This is one area that it could explore through acquisitions. “We have made three acquisitions already, and we are always looking at new opportunities,” he said. “We see POS as the basis of an operating system for a store, with lots of related services coming off of it. Sometimes our customers want to buy from a single vendor so we may make acquisitions to address that, to seamlessly integrate components so that they are part of a single solution.”
This also points to Lightspeed’s longer-term ambitions. “I think that the goal over the next couple of years is to prepare for the optionality of going public or getting even larger staying private. We are putting everything in place so that the company has lots of options,” he says. He didn’t add getting acquired itself but in the ongoing consolidation in e-commerce and payments that is seeing the likes of PayPal snapping up several companies, and Lightspeed itself buying smaller players, it too could become a target as well.
“Over the past few years, Lightspeed has grown rapidly, becoming a Canadian technology industry leader in the SaaS market,” said Christian Dubé, Executive Vice-President, Québec at CDPQ, in a statement. “This investment fits with la Caisse’s strategy to back the efforts of Quebec’s innovative companies in their international growth and acquisition plans.”
“We are pleased to support Lightspeed and help make this thriving and innovative Québec-based company a dominant force in the industry,” stated Investissement Québec President and Chief Executive Officer Pierre Gabriel Côté. “This investment will not only create high-quality jobs in Québec, but also help build a world-class technology company right here. It is also a clear demonstration of Investissement Québec’s desire to continue supporting innovative businesses and confirms its position as one of Québec’s venture capital leaders.”