Point of sale investments – Revel Systems Gets More VC Money

Revel Systems today announced additional funding as part of it’s C series.  The most recent funding is $13.5 million – which follows a $65 million dollar funding last year, as well as a $25 million dollar equity line.   Revel now tops the cloud POS industry in funding!
I spoke with Chris Ciabarra, CTO of Revel Systems yesterday morning and got caught up on what the latest news is at the company.    
First, why only $13.5 million?  Answer:  It was a “friendly” transaction at a preferred rate, with an implied valuation of $500 million dollars, or about 50% of what they used for valuation last year.  The money is going to be used towards expansion.  Expansion in Europe he explained, requires much more of a face-to-face sales approach.  US customers can be closed on the phone, but Europeans want a more personal experience.  Revel is also expanding into Singapore, Hong Kong, Thailand. 
Revel is current on-boarding over 1,000 terminals a month, Ciabarra said.   The average store is using two terminals, so that means they’re adding about 500 customers a month.   Revel declined to disclose what percentage of revenue was coming from payment processing fees.  
Other tidbits:
Revel is creating a number of “white label” products for various companies, and white label sales, he said, were expected to account for 50% or more of new clients next year.   Revel is handling the support for these white label clients.  
Revel is currently hiring 30 employees per month and has 400 employees on staff.    The complexity of EMV and PCI are driving weak companies out of the point of sale business, Ciabarra pointed out.  Revel is looking to capitalize on that.      
Asked as to whether the current VC funding cycle is about over, Ciabarra said he thought it had maybe a year or two to run, but that since interest rates were about to rise, “no one really knows”.   Revel, like many others, is closely watching the Square IPO to see what kind of valuation that brings.   Ciabarra said that they would be doing another round of funding prior to a Revel IPO, which he thought might come in one and a half to two years.   (First Data, parent of the Clover point of sale company, also has an IPO in the works.) 
 venture funding
Revel reports running up against Oracle/Micros regularly, and winning – especially since Revel has launched it’s ethernet version.  Ciabarra said that “we see them all the time”, and particularly in deals involving government agencies where Wi-Fi is not allowed and in stadiums, where Wi-Fi strength is a problem.   Given that Revel’s cost per terminal, including setup, installation and support, is about a fourth of the cost of a Micros system, it’s not a surprise. 
As to other competitors, on the lower end he cited Square and Clover,  but felt that there was no competition in the higher end of QSR (quick service restaurant).   In the retail segment, competitors included Vend and Shopkeep, and on the higher end, Oracle/Micros.    He did not believe that Revel was bumping into Aptos, probably the largest POS company in terms of installations, with over 122,000 terminals, or Revention – a fifteen year old leader in QSR.    ( Click here for an article detailing an interview with the Aptos CEO) that we conducted recently.    Revel sells mostly to Tier 3 and Tier 4 companies and Ciabarra mentioned that a number of franchises, particularly those expanding internationally, were looking at or buying Revel software.  
How many terminals does Revel have out there? Some varying numbers were proffered in the interview, however, I was told that 10,000 terminals is the “official” number.  Readers will note that this is clearly at odds with the numbers implied in the press release below – and 10,000 terminals is the same number that was being given back in November (curious viewers can search and find a variety of articles on the Internet).  What’s the real number and why is there such a discrepancy?   Readers may also wonder why they took money now at a valuation that’s half of what they got last year?  Because it was a “friendly” transaction?  If I were an investor in an earlier round paying twice as much, I’d be pissed.   And 400 employees against 5,000 installations – or even 10,000 installations? The burn rate has to be pretty darn high.  
Last week I was in NYC and stopped in to see Revel’s office there.  While I was being given a demo I noticed video monitoring being used in the office.  A little while later I caught one of the employees viewing me on one of his monitor – presumably recording the demonstration.  Standard operating procedure?  I asked Revel’s public relations person, but received no answer.   More likely, paranoia. 
Tomorrow the Point of Sale News will publish data comparing the top cloud POS companies on key metrics.  It’s very intriguing information and you haven’t seen it anywhere else.   Tune in – you’ll be glad you did.
The official Revel press release:

San Francisco – August 18, 2015 – Revel Systems, the leading iPad Point of Sale (POS) platform, announced an investment of approximately $13.5 Million from ROTH Capital Partners, a relationship-driven investment bank with close connections to Revel. This was Revel’s C-3 investment round, a follow-up to the Series C-1 round led by Welsh, Carson, Anderson & Stowe (WCAS) in November 2014 and Series C-2 round led by Intuit Inc. in December 2014. This brings Revel’s Series C round to approximately $110 Million.

Revel will use the funding to further accelerate its global expansion and to support large enterprise engagements within both existing and new verticals. Revel is now formally recognized as the leader of the new generation POS industry across both SMBs and enterprises, and its Point of Sale platform is being deployed in tens of thousands of locations across the United States and internationally.

“We have a close relationship with Roth,” said Lisa Falzone, Revel co-founder and CEO. “We were not able to accommodate Roth’s investment in the C-1 or C-2 rounds, but we are pleased that we could do it now. Investor interest has remained very strong at ever-increasing valuations, and while we cannot accommodate all investors, we are pleased to welcome Roth to Revel now. Given our accelerating organic growth in SMBs and enterprises and our strategic relationships with industry leaders like Intuit and Apple, we now have to prepare for growth that is beyond our earlier predictions.”

“While looking for a strategic investment in commerce, we came to understand that Revel’s cloud-based POS platform is uniquely positioned to control payments and commerce, not just in physical stores but across the whole omni-channel,” said Gordon Fallone, Managing Director at ROTH Capital Partners. Revel’s POS platform is uniquely scalable, from small SMB locations with one terminal to large enterprises with high volumes and multiple terminals. We have recently seen Revel selected by industry leaders as their POS platform of choice for both SMB and enterprise applications, and we have seen the Revel platform displace Micros and NCRs in some of the largest global enterprise chains. It is unusual to find a company with huge technology leadership and no effective competitors, and Revel’s growth potential and market positioning are amazing. We are pleased to be a part of Revel’s growth story going forward.”

Revel’s iPad POS platform is the most comprehensive POS platform in the industry and enables SMBs, franchise operators and enterprises access a full suite of enterprise-grade operations and reporting features to help them manage and grow their businesses. Revel’s POS platform includes complete front-end order entry, cash register and payment processing, coupled with back-end personnel scheduling, time clock and payroll management, inventory management, comprehensive product/menu management, and advanced reporting to measure and optimize business performance. Revel’s end-to-end commerce platform is indefinitely scalable, from single location SMBs to enterprises with thousands of locations, and is designed to move commerce data seamlessly through open APIs.

To learn more about Revel Systems visit www.revelsystems.com.

About Revel Systems

Revel Systems iPad POS was founded in 2010 in San Francisco with the goal of changing the point-of-sale market. Founders Lisa Falzone and Chris Ciabarra developed a quick, intuitive and secure iOS-based point-of-sale system by combining cloud-based technology and the mobility of the iPad. Revel’s POS platform offers a feature-rich POS solution for restaurant, retail and grocery establishments with integrated sales reporting, business intelligence analytics, payroll, inventory tracking, customer relationship management and more. Through Revel’s organic solutions and partnerships, Revel iPad POS users can access a full set of commerce solutions, including mobile payments, online ordering, gift or reward cards and advanced financial software suites. For more information on the new standard in point of sale, please visit http://revelsystems.com.

About Welsh, Carson, Anderson & Stowe

Welsh, Carson, Anderson & Stowe (“WCAS”) focuses its investment activity in two target industries, information/business services and healthcare. Since its founding in 1979, the Firm has organized 16 limited partnerships with total capital of over $22 billion. WCAS has a current portfolio of approximately twenty-five companies. WCAS’s strategy is to partner with outstanding management teams and build value for the Firm’s investors through a combination of operational improvements, internal growth initiatives and strategic acquisitions. The Firm is currently investing Welsh, Carson, Anderson & Stowe XII, L.P. See www.wcas.com to learn more.


About ROTH Capital Partners, LLC

ROTH Capital Partners, LLC (ROTH), is a relationship-driven investment bank focused on serving emerging growth companies and their investors. As a full-service investment bank, ROTH provides capital raising, M&A advisory, analytical research, trading, market-making services and corporate access. Headquartered in Newport Beach, CA, ROTH is privately-held and employee owned, and maintains offices throughout the U.S.  For more information on ROTH, please visit www.roth.com.