Shortly after the first iPad came out, Vaughan Fergusson recognised the opportunity to leverage the hardware as a Point of Sale (POS) solution. Vaughan was bold in his ambition and quickly seized the opportunity to launch cloud POS software company Vend.  Vend found their sweet spot early on.

Movac became part of the Vend growth story through an investment in 2016. The company was sitting at just under $20m in Annualised Recurring Revenue and had an impressive growth rate. The company had survived the hard grind of finding product-market fit and fine-tuning a culture that could deliver on the opportunity Vaughan had created. Movac saw an attractive window of opportunity to invest.

Movac’s partnership with Vend saw them through to the March 2021 US$350m acquisition by Lightspeed, a leading provider of cloud-based omnichannel commerce platforms. This was an exceptional outcome for Vend, the founders, employees, investors and the wider NZ tech ecosystem.

Unsurprisingly, there was a lot of hard work and many tough decisions that were made throughout Vend’s growth story. We would like to share some key reflections on our journey with Vend.

  • Vend’s growth path reinforced our observation that companies go through a series of stages that each requires a re-evaluation of go-to-market strategy, the concentration of efforts to different parts of the business, and skillsets within the team.  The exact numbers vary depending on the market and company but there seem to be five stages – zero to early traction, then up to around $4m revenue, then up to $10-12m revenue, then up to ~$17m. The next stage for SaaS companies is about locking in margin and breaking through the churn ceiling, where unless percentage churn is reduced massively the revenue tops out.  Beyond this, the company is set for strong growth and becoming one of the winners in its sector.  Vend’s go-to-market strategy had to evolve to prepare for each stage of growth and so too did the leaders. Vend had a series of excellent leaders, each of whom was right for the phase of growth.
  • The journey reiterated the importance of strong SaaS margins. Competitors who developed their own payments engine were able to achieve 2-3x the gross margin of players who used third-party payment providers. This freed up cash for sales and marketing spend which in turn fuelled further growth.
  • One of Vend’s great strengths was its engineering team. They constantly challenged themselves and weren’t afraid to re-engineer the product to fit the product strategy.  As a result, Vend built a leading modular platform that could easily integrate with other parts of the eco-system, such as third-party apps like payroll. Vend benefitted from Vaughan’s humble leadership style and a strong architecture and engineering vision from Michael Koziarski (Koz) and Ben Gracewood.
  • Vaughan’s obsession over the quality of the user interface set the company in good stead from day one and this core focus became their key competitive advantage throughout their growth story. We strongly believe the user experience was the best in the market and that it was a key driver of Lightspeed’s interest in Vend.

Each success strengthens the NZ eco-system

Because of the strengths of the Vend platform we believe it will become a core part of the Lightspeed product going forward, making New Zealand engineers a critical part of the Lightspeed engineering team. We anticipate Lightspeed will continue to build out the local NZ capabilities.

It was not until Apple’s acquisition of Power by Proxi that Apple was compelled to build research and development capabilities in NZ. Vend will be adding to the list of acquisitions that stimulate investment in NZ engineering teams, which are key to developing our local talent and energising the next wave of NZ tech innovation.

The Village

There are many people who have played a crucial role in guiding Vend through to an outstanding result. A huge congratulations to Vaughan Fergusson, Alex Fala, Ana Wight and the entire executive team, as well as the people who have contributed at the Board level over the years for their part in this success. I’ve mentioned Koz and Ben but want to re-emphasize the importance of the rigor and determination they brought to the engineering.

We would also like to acknowledge the early investors in Vend including Sam Morgan, Rowan Simpson, David Wilson, Christoph Janz and Pawel Chudzinski at Point9 Capital, Punakaiki Fund, Craig Winkler, and Milford. The willingness of these investors and others like them to contribute early capital is essential if New Zealand is to continue having successes like Vend. Beyond the capital, the support, wisdom and advice they provide are priceless to entrepreneurs.

Movac has been enormously privileged to partner with Vend and the wider ecosystem through this investment. Love our village!

Kind regards

Mark Stuart and the Movac team