Wooing Restuarants, Retail Software Startup LightSpeed Buys POSIOS
In an interview with Street Fight, Lightspeed founder Dax Dasilva said that with the acquisition the seven-year old company now serves 21,000 business worldwide, processing 8.2 billion in annual run-rate transactions. The company is bringing on much of the team of the Belgian startup to help guide the restaurant product, and help the firm expand into European markets.
The point-of-sale market is undergoing an extensive restructuring. The introduction of new cloud-based software has dramatically undercut the legacy providers, which have built big revenue streams managing installation and maintenance for businesses — something that is far less necessary when data is stored remotely. Much of the early growth for new entrants has come from previously underserved small businesses, but as the software becomes more extensive and trustworthy larger businesses have started to adopt the newer products.
Dasilva also pointed to renewed payment legislation as a driver of adoption. “There’s a huge upgrade cycle that’s happening with point of sale systems because of government regulation and EMV adoption over the next year or year and half,” he said.
Massive credit card breaches in stores such as Target and HomeDepot are driving regulators in the U.S. and abroad to require retailers to adopt more advanced point-of-sale and payment processing capabilities. Dasilva argues that the coming shift to EMV payments in the U.S., for instance, and financial laws in Europe will accelerate the relatively long adoptions cycles that have slowed the growth of new point-of-sale technologies.
The other wrinkle in the point-of-sale market is that it’s increasingly being folded into other front- and back-office functionality. Many of the new entrants have developed marketing products and more traditional back-office functionality such as payroll to help drive value for their services. Earlier this week, reports surfaced that Square — the most well-capitalized of the upstarts — was testing a payroll product.
Lightspeed and others have partnered with existing players for accounting and payroll, but the line between front and back-office is increasingly blurred. But in certain verticals, such as retail, Dasilva believes the company can provide both the front and back-end services as well as ecommerce capabilities.
“[The] point-of-sale [market] is in a unique position because it contains all of the data about a business’s customer activity, inventory, sales history,” he told me.
For the next 12-18 months, expect a handful of firms to excel in certain verticals as they build out the more complicated features needed in each market by larger businesses. However, the core data management capabilities that underpin these systems — the engine that powers the various features — remains far more vertical agnostic. Expect these products to evolve into effectively data management platforms, on top of which the company and others can develop applications.
Steven Jacobs is Street Fight’s deputy editor.