New Zealand-based Vend raises $8M without turning to the Valley
The conventional wisdom about New Zealand startups – and even Australian ones – is that they have to look outside of their home country when it comes time to raising serious money. In both countries, there’s often enough capital for startups to get seed funding, but there’s rarely enough for a Series A.
Vend, an Auckland, New Zealand-based retail operating platform, has just defied that logic. The three-year-old startup has just closed an $8 million round, funded by investors in New Zealand, Australia, and Germany. Nary a Silicon Valley venture capitalist was involved.
Vend is talked about in New Zealand as the country’s most exciting tech company behind Xero, which is already six years old and has raised more than $100 million. In the space of three years, Vend has acquired more than 6,500 customers globally. This year it has a run rate for of about $3 million. In total, it has now raised more than $10 million. As it scales and looks to grow its footprint in the US, Australia, and the UK, it has brought in funding from a slew of angel investors, including Craig Winkler, the founder of MYOB, and Paul Bassett and Matt Rockman, co-founders of job-search site Seek.com.au. In New Zealand, the Milford Active Growth Fund also go in on the round, and Berlin’s Point Nine was one of the lead investors.
Vend bills itself as a “point of sales” software company, but really sales are only part of its business. Founder and CEO Vaughan Rowsell calls Vend a “retail operating system,” which means it takes care of pretty much all retail operations aside from payments and accounting, including transactions, inventory, CRM, and analytics. “At some point, we’re going to stop referring to ourselves as a point of sales company,” says Rowsell.
Unlike other retailed-focused startups, Vend isn’t concentrating on payments, preferring instead to partner with the likes of PayPal for those purposes. Like Xero, it also serves as a platform for third-party developers, who can add add-ons that improve the Vend user experience and offer customization for specific business types, such as florists or hairdressers. The platform aspect gives Vend a leg-up over its competitors, including other cloud-based POS services, such as ShopKeep, Erply, and Merchant OS, which offer more tightly controlled products.The company’s customers, which started off as mainly small and medium-sized businesses but also encompasses companies that have a couple hundred stores, are split among North America (30 percent), Australia (30 percent), and the UK (20 percent), among other countries. Rowsell says there was no specific plan in not bringing US VCs in on its latest round, but he is proud that the company didn’t need to look far for its money. “It’s nice to show that there’s plenty of investment money out there that’s closer to home,” he says.
Like Xero and Sydney’s Atlassian, Vend considers itself a global company. It is headquartered in Auckland, New Zealand’s largest city, where it has about 40 staff, but it will be using its latest round of funding to scale the team, especially on the sales and support side in the US, the UK, and Australia. Because of its “zero touch” software-as-a-service sales strategy, it has been able to keep a small and nimble team, although it will hire more sales people to keep customer support at a high level as it builds out internationally. Its pricing plan ranges from $35 a month to $170 a month.
Despite its global outlook, or perhaps because of it, Vend acknowledges that it is a New Zealand company, and that that comes with advantages and disadvantages. “We’re very cognisant of our Kiwi approach to things,” Rowsell says. One of the advantages is that Vend has a good reputation in the job market in New Zealand, which has helped it suck up a lot of the engineering talent around Auckland. In New Zealand, which has a population of 4 million, there is less competition between companies for engineering talent than there is in Silicon Valley.
On the other hand, the company has had to learn how to negotiate American culture, which at first glance seems very similar but is actually very different. New Zealanders, thanks to the “Tall Poppy Syndrome,” tend to be uncomfortable with promoting themselves or their businesses. So when the company has been meeting with investors in the US, it has to switch mindsets, says Rowan Simpson, who is the director of Vend’s board and a former executive at TradeMe, one of New Zealand's most successful tech companies. “In the US, we have to constantly reinforce each other,” says Simpson, who takes a moment to pound his chest before adding, “You know: ‘Be American!’” The implication is that Kiwi companies aren’t great at hyping themselves up in business meetings.
Ultimately, that might also be Vend's biggest challenge. While it has made an encouraging start, its VC-backed high-growth strategy is new ground for Rowsell, and even his investors, most of whom have seen success in Australia and New Zealand but have not really proven themselves on the wider world stage. For Vend, the next six months will be crucial. Given the growth opportunities in the US and the developed stage of the retail market in the country, Vend will also likely find that it has to "be American" perhaps more than it first intended.