Uber’s food delivery business Uber Eats has acquired tech company orderTalk, which was once headquartered as a startup in Cape Town, South Africa. Here’s why it’s such a big deal.
OrderTalk provides online ordering software to restaurants that integrates with a restaurant’s point-of-sale system. The announcement was made yesterday by SA venture capital (VC) fund Knife Capital (orderTalk first revealed the acquisition on its blog last week).
No ad to show here.
The terms of the deal — including how much Uber Eats paid Knife Capital and orderTalk in the deal — were not disclosed.
Read more: Uber Eats acquires SA founded tech firm orderTalk for undisclosed amount
Why then is it such a big deal? Here are three reasons.
1.From a startup in Cape Town to a global force
The startup was founded by Hilton Keats in 1998 on the back of an online ordering software development partnership with a US restaurant chain.
In 2004 lawyer Patrick Eldon joined as CEO and opened the Cape Town head office in 2005. After initial angel investor backing, HBD Venture Capital (owned by internet billionaire Mark Shuttleworth and subsequently managed by Knife Capital) invested R9-million ($700,000) in 2008 to scale the business internationally.
Uber Eats funding allowed orderTalk to grow revenue 60 times since 2008
While orderTalk initially expanded its technical capabilities in Cape Town, the main client base started growing aggressively in the US and UK. Over the years the core business was relocated to Dallas, Texas.
2.VC funding allowed business to scale
Knife Capital said in a statement issued yesterday that the business has shown “consistent and phenomenal” growth over the past 10 years — having increased revenue by 60 times since the VC investment, and growing from five employees to 27. The company also repaid the initial VC investment via dividends back to HBD, even before the Uber exit.
Commented Patrick Eldon, CEO of orderTalk, in the same statement: “Raising capital by way of the investment made by HBD provided enormous value, not only in tangible but also intangible terms.
“The strategic support, mentoring, advice and hands-on assistance received from HBD and Knife Capital over the years of the investment have been invaluable.”
3.Final exit of Mark Shuttleworth fund
OrderTalk was the final investee company to exit from the R150-million HBD Venture Capital Fund that Knife Capital managed.
Knife Capital partner Keet van Zyl commented that: “We have proved that locally developed technologies can have global impact and that one can attain superior venture capital investment returns from South Africa”.
Knife Capital has also achieved exits to General Electric and Visa from the same HBD Fund.
The VC Firm is now backed by the Draper Gain Family Office and it continues to actively invest via a consortium of funding partnerships, including the South African Revenue Services’ (Sars) Section 12J Venture Capital Company KNF Ventures.
Commented Vuyisa Qabaka, co-founder of SA equity crowdfunding platform Uprise.Africa: “This is a story that needs to be told and celebrated… key roleplayers: Keet van Zyl, Mark Shuttleworth and (business coach — Ed) Julia Fourie”.
Perhaps it’s time to crack open that champagne bottle? But while you do so, ask yourself — how big a deal was this?
No one is saying how many millions orderTalk directors and Knife Capital have made on this deal.
Read more: Startups need at least 10x in 5 years to be good investment – VC, angel investors
Editor’s note (25 May 2018 and updated 28 May 2018): Knife Capital partner Keet van Zyl yesterday told Ventureburn that the deal is indeed a “big” one and “significant in terms of return on investment”, but could not disclose the figure as “for strategic reasons from Uber’s side” (In the initial version of this note, Ventureburn stated that Van Zyl had said the deal was confidential as Knife Capital is privately owned. Van Zyl has subsequently pointed out that this was “not necessarily so”. We have therefore amended this note – Editor).
Added Van Zyl: “The VC funding vehicle making most of the money is HBD Venture Capital via their shareholding in orderTalk. Venture Capital Fund Managers get rewarded for enhancing performance via Carried Interest (https://en.wikipedia.org/wiki/Carried_interest). The Knife team earns significant carried interest on the deal, but we are privately owned and for the reasons stated above, we can’t disclose the figures,” he said.
He clarified too, that orderTalk was founded in South Africa and that this is also where the HBD investment was done in 2008. “After that orderTalk Inc. was started in the US as a wholly-owned subsidiary of the orderTalk SA Holding Company. Uber acquired orderTalk Inc, with the money then naturally flowing back via SA Holdco,” he said.
Featured image: Uber Eats (Supplied)
