Toast has seen tremendous growth over its five years of existence. We wouldn't be surprised if the next stop is an IPO. (And directing $1 billion toward R&D efforts is certainly not small potatoes.)
— Erika Adams
Boston-based restaurant technology company Toast has secured a $250 million Series E round of funding, the company confirmed today, less than a year after its last huge raise. The new influx of capital pushed Toast’s total valuation to $2.7 billion. The investment was lead by TCV and Tiger Global Management, and included participation by several other existing investors including Bessemer Venture Partners and Lead Edge Capital.
“It’s another good mile marker for the company, and it’s more capital to deploy on all the different things that we’re super excited to help restaurateurs with,” Toast chief financial officer Tim Barash said.
As part of the announcement, Toast outlined plans to invest $1 billion in research and development efforts over the next five years to build up the suite of products that it offers to its restaurant customers. While best known for its point-of-sale system, Toast’s offerings also include marketing and workforce management capabilities.
Specifically, Toast will use the new round of funding to upgrade its data reporting capabilities for restaurateurs, invest in more hardware development following last year’s successful launch of handheld POS system Toast Go, as well as launch new products to increase staff retention and better equip restaurateurs to effectively handle labor management. Toast also plans to develop more personalized guest marketing tools for restaurants.
Making Big Bets
Barash admitted that the company was already well-capitalized from previous funding rounds (it closed a $115 million round less than a year ago). However, the company has been growing faster than originally expected and leadership had been seeing “immense demand” from the investment community over the past couple of quarters.
“It just made more sense to bet even bigger,” Barash said.
He declined to share exact details around Toast’s larger capitalization plans, but confirmed that there were “certainly” no plans to sell the company at this point.
“Our ambition has always been to build a large, Boston-based public company,” Barash said, noting that lead investor TCV in particular has a deep bench of expertise in scaling gigantic tech companies, including Facebook, Netflix, and Spotify. Toast plans to leverage that expertise as it charts its own global growth strategy. David Yuan, general partner at TCV, will join Toast’s board of directors.
“When the right time comes [to go public], we would,” Barash said. “We’re already at the scale where we could go out to the public markets, it just makes sense to continue to focus on what got us here.”
Toast launched in 2013 and currently counts nearly 1,500 employees and “tens of thousands of customers” across the US, from nationwide chains like Jamba Juice to independent, one-unit operators.