Cake Technologies, the British fintech start-up who wanted to make the payment of your restaurant or bar bill more convenient, was bought by American Express – the credit card giant is considering strengthening its payment options for Amex members. ]
According to sources, the operation was quietly completed last October for a final price of $ 13.3 million (about £ 10.1 million). However, due to a turn of eleven hour preferential debt and after fees, only a few shareholders made a profit. I also understand from a source that Cake had raised a total of 4.5 million pounds sterling in equity and 1.4 million pounds of debt. Part of the equity financing was a crowdfunding round of £ 1 million on Crowdcube in 2015.
Confirming the acquisition, American Express gave the following statement to TechCrunch:
Last year, American Express acquired Cake Technologies. This year, we will welcome Cake and its technologies to collaborate to provide members of our map with enhanced service and value in the dining room, an area in which many of our map members are passionate.
A spokesman for American Express declined to comment on the exact financial terms of the deal, but said it was a “good result for Cake employees, previous investors and American Express “. They confirmed, however, that Cake employees are now American Express employees.
This includes Cake founders Charlotte Kohlmann and Michelle Songy, who are respectively Vice President Global Dining Platform Solutions at American Express and Global Platform Dining Solutions at American Express.
“We are excited to welcome Cake with us and look forward to collaborating to soon offer our subscribers exciting new features in the dining space,” adds the American spokesperson. Express.
The story back to the eventual release of Cake makes reading interesting. According to a source familiar with the start-up’s path to a sale, who spoke to TechCrunch on condition of anonymity, she was very close to raising a £ 5 million Series A to the 39, autumn 2016 before the founders reasons, “although the source refused to diverge what these were.” This then left Cake in a financially precarious situation because the company could not find another VC to intervene fairly quickly before running out of money.
During the holidays / early 2017, Cake’s board of directors set up a structured rescue cycle in the form of debt and intended to give more time to the startup to try to achieve a commercial sale. All existing shareholders were given the opportunity to participate on a pro rata basis, although some declined because of the substantial risk of doubling.
The loan was also structured so that, if the company became acquired, these eleven-hour investors would obtain a multiple preferential yield. This, I am told, explains why some investors earned money at the exit, while others, including Crowdcube backers, lost money even after have taken into account EIS tax breaks.
In May 2017, American Express first made an offer to purchase Cake. The start-up showed due diligence at the end of June, but American Express reached the deal in mid-July for unknown reasons. Determined to put the sale back on track, Cake co-founder Kohlmann flew to New York unexpectedly and the deal was finally concluded in October.
“Despite the complications and the long process, Amex did a very good job here,” says my source. “It’s clear that Cake is now a very important part of their digital strategy and the price of buying seems to be a good value in this context.” The Cake user experience will be an asset to users of the Cake. Amex application once fully integrated and the Cake POS integrations at the basket level will give Amex a better overview of the products purchased by their customers rather than their destination and the amount spent. “