When I met Adam Guild, Owner CEO and cofounder, at San Carlos restaurant The Toss, it was immediately clear he’d been there before.
“Our cofounder and CTO jokes that this is his new office,” Guild told me. “He’s basically got a sublease! He brings his laptop here during the day and works right next to the register—so he can see people coming in, ask if they’ve used our platform, and interview them to figure out where the friction is.”
When Guild and I met in March, The Toss had just recently started using Owner’s software, a platform built to manage the digital presence of mom-and-pop restaurants. Tracy Everett, owner and operator at The Toss, gave it a positive review: “It’s going super, super well,” she told me. “There have been little growing pains, moments of fear, but they’ve really been on-call.”
And over a (sublime) chicken pesto panini, Guild helped me dissect what the opportunity for a restaurant tech company actually looks like from his perspective. The essence of Guild’s case is this: That restaurants are perhaps a relatively underserved market to begin with, but that the most meaningful opportunity lies in delivering value for a specific kind of restaurant owner—the mom-and-pops.
“The technology that Sweetgreen and Cava both use to power their online ordering system is a company that won’t even touch any customer that has less than 50 locations, because they’ve identified that it’s so much harder to serve small businesses, even those with 10 locations,” said Guild. “At Owner, we’ve geared our entire model towards helping small business owners.”
And most restaurants are, well, pretty small parts of a really large, really fragmented marketplace. There are about 749,000 restaurants in the United States, and nine out of every ten have less than 50 employees, according to the National Restaurant Association. That first number is smaller than it used to be since there were more than one million restaurants before COVID-19—a reality that highlights just how precarious being a restaurant owner can be.
“The restaurant and food service industry is forecast to reach $1 trillion sales in 2024, and nationally mom-and-pop restaurants encompass 40% of the restaurant industry,” Masha Bucher,founder and general partner at Day One Ventures, said via email. “Owner’s the largest investment of our current fund and I think we struck gold.”
Other Owner investors include Redpoint, Altman Capital, and SaaStr Fund, and the company is part of a sprawling category broadly termed as restaurant tech. It’s a category with a lot of subcategories, Mark Mullen, Bonfire Ventures cofounder and managing director explained to me: “There’s software solutions, there’s delivery solutions, there’s robot solutions, and so on.”
“Restaurant tech is really everything that a restaurant touches,” said PitchBook analyst Alex Frederick. “So, that could be back office, management software, or loyalty programs. It could be Wi-Fi offerings for consumers in the restaurant and could be also inclusive of third-party delivery.”
At the center of the space seems to lie an old truth: That the restaurant business is a tough business.
“The biggest problem for restaurants is food costs and employee costs,” said Mullen, an early investor in ChowNow (and, fun fact, whose dad was the CEO of more than one restaurant chain). “In California, it’s going to $20 an hour, right? And with all that cost increase, they’re going to try to push it up to the customer, but, eventually, those customers are going to revolt…You can’t just keep raising costs, raising prices forever, so I hope there’s tech that tries to improve the margins.”
Funding-wise, this isn’t exactly a booming category right now, said Frederick, who notes that funding to restaurant tech companies has decreased significantly over the past two years, with funding for third-party restaurant delivery especially hard hit.
But what remains is this: A big market, with big problems to solve. Which brings us back to the umbrella-ed table at The Toss in San Carlos with Owner CEO Guild, who seems to truly and existentially love local restaurants.
“A world drained of these local restaurants is a world drained of color, where suddenly every neighborhood begins to look and feel exactly the same,” he said.
Which, a month and a half later, begs the question: How is The Toss doing with Owner’s software now? I cold-called the restaurant and soon found Everett, and she told me over the phone:
“The story’s not over, but we’re delighted so far.”
ICYMI…CoreWeave, an AI cloud computing startup, raised a $1.1 billion round of funding at a $19 billionvaluation. More from my colleague Sharon Goldman here.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.
Joe Abrams curated the deals section of today’s newsletter.
Correction: The email version of this article inaccurately stated that The Toss is in San Mateo. It is in San Carlos. That version also misstated a statistic from the National Restaurant Association.
VENTURE DEALS
- Arbol, a New York City-based provider of climate risk solutions, raised $60 million in Series B funding. Giant Ventures and Opera Tech Ventures led the round and were joined by Mubadala Capital.
- Securitize, a San Francisco-based company that tokenizes real-world assets, raised $47 million in funding. BlackRock led the round and was joined by Hamilton Lane, ParaFi, and Tradeweb Markets.
- Indicium, a New York City and São Paulo, Brazil-based data consultancy, raised $40 million in funding from Columbia Capital.
- Oasis Security, a New York City-based platform designed to automate the security and management of non-human identities, raised $35 million in a Series A extension from Accel, Cyberstarts, and Sequoia Capital.
- Peregrine, a San Francisco-based real-time decision and operations management platform for public safety agencies, raised $30 million in Series B funding. Friends & Family Capital and Fifth Down Capital led the round and were joined by Goldcrest Capital, Craft Ventures, Godfrey Capital, and others.
- Traceable AI, a San Francisco-based API security company, raised $30 million in funding. IVP led the round and was joined by Citigroup, Geodesic Capital, Sorenson Capital, and Unusual Ventures.
- Mimic, a Palo Alto, Calif.-based ransomware defense company, raised $27 million in seed funding. Ballistic Ventures led the round and was joined by Menlo Ventures, Team8, Wing Ventures, and Shield Capital.
- Aikido Security, a Ghent, Belgium-based security platform for developers and small-to-medium-sized enterprises, raised $17 million in Series A funding. Singular.vc led the round and was joined by Notion Capital and Connect Ventures.
- Invent Analytics, a Philadelphia, Pa.-based developer of supply chain AI technology, raised $17 million in Series B funding. LFX Venture Partners led the round and was joined by existing investors European Bank for Reconstruction and Development and Collective Spark.
- Baselayer, a New York City-based B2B platform designed to optimize onboarding and protect against fraud, raised $6.5 million in seed funding from Torch Capital, Afore Capital, Founder Collective, Picus Capital, Gilgamesh Ventures, and others.
- Unicorn, a Chicago, Ill.-based platform for spirits and wine collectors, raised $5.8 million in seed funding from Protagonist, Blue Equity, 640 Oxford, Middleton Partners, and angel investors.
- BAXUS, a New York City-based marketplace for collectible spirits, raised $5 million in seed funding. Multicoin Capital led the round and was joined by Solana Ventures, Narwhal Ventures, FJ Labs, and angel investors.
- Caladan Bio, a Brooklyn, N.Y.-based bioreactor producer, raised $5 million in seed funding. Twelve Below led the round and was joined by Lerer Hippeau, Collaborative Fund, Wireframe Ventures, Ritual Capital, and Factorial Capital.
- Deltia.ai, a Berlin, Germany-based platform that uses AI and computer vision to monitor manufacturing operations, raised €4.5 million ($4.8 million) in seed funding. Cavalry Ventures led the round and was joined by Merantix.
- StepSecurity, a Seattle, Wash.-based security platform for Github actions, raised $3 million in seed funding. Runtime Ventures led the round and was joined by Inner Loop Capital, SaaS Ventures, DeVC, and angel investors.
- Plotline, a San Francisco and Bengaluru, India-based platform app customization platform for B2C companies, raised $2.6 million from Elevation Capital.
- Made With Intent, a fully-remote developer of website performance and customer targeting tools for e-commerce businesses, raised £1.5 million ($1.9 million) in seed funding. Mercuri led the round and was joined by Portfolio Ventures and Haatch.
- Symbe, a London, U.K.-based platform designed to automate the creation of tailored business cases in the B2B sales process, raised £1.2 million ($1.5 million) in pre-seed funding. Concept Ventures led the round and was joined by Pact VC, Notion Capital, and others.
PRIVATE EQUITY
- BVP Forge announced a majority recapitalization of Mortgage Automator, a Toronto, Ontario-based loan origination and servicing software for private lenders. Financial terms were not disclosed.
- Cin7, backed by Rubicon Technology Partners, acquired Inventoro, a Prague, Czech Republic-based AI-powered sales forecasting and inventory replenishment platform. Financial terms were not disclosed.
- Climavision, backed by TPG, acquired Intersphere, a Fort Collins, Colo.-based AI-powered weather forecasting platform. Financial terms were not disclosed.
- GI Partners acquired DQE Communications, a Pittsbuegh, Pa.-based provider of high speed data networking for businesses and carriers. Financial terms were not disclosed.
- Southern Home Services, a portfolio company of Gryphon Investors, acquired David Gray Electrical, Plumbing, Heating & Air, a Jacksonville and Palm Coast, Fla.-based provider of electrical, plumbing, heating, and cooling services. Financial terms were not disclosed.
EXITS
- Danone acquired Functional Formularies, a West Chester, Ohio-based provider of organic feeding tube formulas, from Swander Pace Capital. Financial terms were not disclosed.
- H.I.G. Capital acquired USA DeBusk, a Deer Park, Texas-based provider of industrial cleaning and infrastructure maintenance services, from First Reserve. Financial terms were not disclosed.
IPOS
- Viking Holdings, a Pembroke, Bermuda-based cruise line, raised $1.5 billion in an offering of 64 million shares priced at $24 on the New York Stock Exchange.
FUNDS + FUNDS OF FUNDS
- Renegade Partners, a San Francisco-based venture capital firm, raised $128 million for their second fund focused on tech companies.
This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers in venture capital and private equity. Sign up for free.
