One of the startup sector’s biggest merger and acquisition deals will go ahead with rival restaurant ordering apps me&u and Mr Yum getting together.
The Sydney and Melbourne startups have raised a combined $165 million in venture capital, having both been founded in 2018, but the deal won’t deliver an exit just yet for investors, proceeding as an all-stock merger.
The deal has yet be approved by shareholders but appears to have widespread support from the celebrity cap tables on both sides.
The combined entity will have Mr Yum cofounder Kim Teo as CEO, with me&u chair Damian Smith running the merged board and me&u founder Stevan Premutico as a non-executive director. While the split was not disclosed, it’s believed to be a marriage of near-equals.
Startup Daily first confirmed merger talks were underway in May, two months after Mr Yum cut 40 roles, its second round of job cuts in seven months. Teo said at the time that her startup was focused on getting “to profitability with our current cash reserves”.
Mr Yum raised more than $100 million in its short life, including $89 million in a Series A led by US VC giant Tiger Global in November 2021. Its cap table also includes Steve Baxter’s TEN13, Airtree Ventures, Skip Capital, the family fund of Atlassian co-founder Scott Farquhar and his wife Kim Jackson, as well as Tennis Australia’s Wildcard Ventures, Broadsheet founder Nick Shelton, Australian NBA star Patty Mills, musician Rüfüs Du Sol, and Kogan founder Ruslan Kogan.
Along the way it also acquired Melbourne startup MyGuestlist and it subsidiary CRM platform Sprout last year.
Me&u raised $30 million in December 2022 in a round led by Acorn Capital and has banked $66 million in total. Its backers include chef Neil Perry, Urban Purveyor Group founder John Szangolies, and former Facebook, Uber, MYOB and Google execs William Easton, Mike Abbott, Tim Reed, and Jason Pellegrino.
It has dominated the Australian pub ordering market, thanks in no small part to investors Justin Hemmes, CEO of the Merivale, with the app rolled out across his hotels empire.
Me&u has 70% market share of the country’s top pub groups compared to 20% for Mr Yum and 10% for others.
The merged business will supply 6,000 venues collectively, generating around $39 million annually in revenue from processing more than A$2 billion in orders in Australia, New Zealand, UK and USA. It’s also on track to reach profitability in 2024 with significant cash reserves. Australia has the highest penetration of QR code table ordering globally.
Kim Teo said the rival firms “always had a deep respect for each other” as they competed for market share and will now look to expand their services.
“Four types of customers interact with our products today – the venue operator, guests, staff and head office teams,” she said.
“Over the next few months, our combined company will launch a number of new products/features focused on elevating the interactions between staff and guests, as well as marketing tools to help increase foot traffic and revenue.”
Stevan Premutico said it was “a rare opportunity to see two strong Australian companies coming together to take on the world”.
Acorn Capital CEO Robert Routley called the merger “an audacious move” by the founders and shareholders of both companies.
“The combined business is an even more formidable force in spearheading the global transformation of technology-driven hospitality services. Acorn looks forward to continuing to support this remarkable Australian success story,” he said.
Read the full article here
