Harris Computer paid $100M for TouchBistro, a steep loss for investors who poured $270M into the POS firm. The deal shows a tough exit path for other VC-backed Canadian tech companies.
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TouchBistro, the Toronto-based restaurant point-of-sale company, has been sold to Harris Computer, a unit of Constellation Software, for $100 million. The Globe and Mail reported the price, which marks a capital loss for the venture capital firms and lenders that backed the company.
TouchBistro raised roughly $270 million in venture funding and debt from big-name investors. The company brought its POS and restaurant management software to market, competing with US-based Toast. Revenue was about $70 million annually at the time of the sale. The price Harris paid leaves investors who put in hundreds of millions with a fraction of their capital.
The sale follows a difficult period. TouchBistro cut spending and staff. Revenue growth slowed. The number of restaurants using its platform dropped from 23,000 to 16,000. The company faced challenges from the COVID-19 pandemic and a pullback in VC funding. Fears of an AI-driven disruption in the software market added to the pressure. OpenAI's ChatGPT Work Pressures Software Margins
TouchBistro rebuffed takeover enquiries that valued the business at hundreds of millions of dollars. A recap by lender Francisco Partners followed last year.
Samir Zabaneh, the former CEO and chair, said the acquisition gives TouchBistro "the scale, long-term support, and expertise" needed to "reach new heights."
The deal shows the pressure on VC-backed Canadian tech companies. Many are unprofitable and facing slower growth. Constellation Software is an acquisition machine. It charted plans to buy such firms back in 2024. The Harris unit's purchase of TouchBistro offers an exit path for others.
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