Kiwi tech star Vend on hiring spree, targets $1b valuation

Now hiring: Vend chief engineer Ben Gracewood, HR head Shirvani Mudaly and chief executive Alex Fala. Photo / Cole Slawson.

Auckland-based software company Vend is on a push to hire 125 staff as it pushes into North America and other markets.

The cloud point-of-sale software maker currently has around 300 employees. Some 54 of the new hires will be in New Zealand, chief executive Alex Fala says.

The privately-held company won't share detailed financials, but Fala says there are now more than 25,000 retailers worldwide who pay to use its product, which allows a traditional cash register to be replaced by an iPad, and also helps small-to-medium businesses manage sales and inventory.

Vend costs $129 to $179 per month, indicating the Kiwi startup's annual revenue is in the $39 million to $54m bracket.

Fala won't say if it's in the black, but he does says it will be able to hire its 125 new staff over the next few months without another raise.

The company's last big round was a $13m raise in 2016 led by local venture capital outfit Movac, which is the largest single shareholder with a 9 per cent stake.

Founder Vaughan Fergusson (whose stake was halved by his marriage split) is the second largest on 8 per cent.

Smaller holders include Peter Thiel's Valar Ventures, Brian Gaynor's Milford Asset Management, Lance Wiggs' Punakaki Fund and Sam Morgan's Jasmine Investments.

Fala is also coy of discussing milestones, but does say he expects to hit is $1 billion valuation within five years (the company was valued somewhere north of US$100m for its last raise).

While Vend's software is cloud-based, it caters to bricks-and-mortar stores rather than e-tailers (though it does offer integration with e-commerce services like Shopify), and mall operators worldwide are taking fright. Is it on the wrong side of history?

"There will always be stores," Fala says.

More, he sees a trend whereby e-tailers have began to open real-life stores. He cites Caspar (mattresses), AllBirds (shoes) and Warby Parker (prescription glasses) as recent examples of hot online companies who have opened physical stores (none are Vend clients).

And then, of course, there's Amazon, which is experimenting with pilot checkout-free stores and recently bought US supermarket chain Whole Foods (which has 472 outlets) for US$13.4 billion.

One of Vend's US customers - "Selftraits," which sells 3D selfies. Photo / Supplied.

With the cost of online promotion skyrocketing, a real-life presence can be regarded as a relatively cost-effective means of marketing and acquiring customers, Fala says.

And while we're heading to a world of mobile payments and Facebook coin, Fala maintains there will always be a place for Vend, especially in its wide role of helping small-to-medium retailers manage their sales and stock by using a mobile as a barcode scanner and other tricks.

One of the company's immediate points of focus is the North American market, where it has launched strategic partnerships with ten of the largest payment processors in North
America, including WorldPay, CardConnect, Evo and North American Bancard following a successful trial.

"Vend has identified a previously untapped channel to market in North America, via payment processors and resellers, giving us access to tens of thousands of additional
on-the-ground salespeople across the continent who are selling Vend's retail software to merchant services as part of their tech stack."

Vend doesn't offer any payment processing itself, but Fala paints his company's partnership approach as a point of difference that's attractive to retailers that gives them more choice and flexibility.

Vend's wider ecosystem spans from tight integration with accounting programmes like Xero and QuickBooks Online to its "light partnership" with Apple that sees it showcased by the tech giant as one of a series of business apps for iOS (the software that runs iPads and iPhones).

Fashion retailer Ingrid Starnes was Vend's first customer. It now has more than 25,000 paying clients worldwide.

The tech industry is full of companies that got speed wobbles after bringing on too many staff, too fast, and planning came unstuck. Vend was one of them, mid-decade.

Fala - an alumnus of the buttoned-down McKinsey & Co who succeeded founder Fergusson in 2016 - says Vend learned from its earlier experience.

He adds it's now a mature company with better systems in place, and one that now has experienced leaders running its offshore offices including ex-telco executive Butch Langlois, who runs its North American operation, based in Toronto, Unilever and Amex veteran Higor Torchia, who runs Europe and HR boss Shirvani Mudaly (ex BNZ and Yellow).

Chief engineering officer Ben Gracewood doesn't anticipate the IT skills shortage will be a problem with the new hiring drive. He gives NZ universities props for turning out quality software development grads, of whom his company hires several a year.