09 April 2021

Punchh Acquired by PAR Technology Corporation for $500M

Punchh, a Cervin portfolio company and leader in loyalty and guest engagement solutions, has been acquired by PAR Technology Corporation for $500 million.

PAR is a leading global provider of restaurant software and has been a Punchh partner for many years. This acquisition makes PAR a unified commerce cloud platform for enterprise restaurants with integrated point-of-sale, back office, payment and guest engagement solutions.


Punchh and Cervin Ventures


Every seed investment has a story behind it. At first, investing at a seed stage in Punchh seemed like a true leap of faith. The market didn't seem large enough. The founders had only started to focus on the enterprise market after trying various combinations of business-to-business and direct-to-consumer models. Would a largely franchised restaurant industry buy software from vendors other than legacy POS vendors? A consortium of investors had come together but none from the class of early institutional seed funds. There were enough reasons to say no.


But we were early in VC. Perhaps, the lack of analytical processes on our side led us to anchor more on the team and their passion. We made a bet on a founding team who had met either at Siebel or at the University of Chicago. They knew the CRM industry and articulated a clear product vision. We could see a path to a $50-100 million revenue business which could be executed efficiently. Was that good enough for venture returns? We weren’t completely sure. After various deliberations, we decided to invest.  


The journey was arduous. Early capital constraints led Punchh to get to their first $10 million in ARR with less than $10 million in capital. The company always had top class sales efficiency metrics, driven by high ACV deals because of the focus on large enterprise customers and an engineering team that was based in India. The strategic vision to build closed-loop CRM systems remained intact and drove the alignment between founders and the Cervin team. Even when things got rough and additional capital was hard to come by, we kept doubling down because we believed in the vision and disciplined entrepreneurship of the founding team. 


Punchh showed real business benefits to customers around recency, frequency, and monetization of visits (for on-premise, take-out, or delivery). Punchh made the brick-and-mortar customer interaction a key element of an omni-channel play, something that had eluded customers trying to tie their in-store and online initiatives. Customer retention improvements of 5% resulted in 25-50% increases in profits as new customer acquisition costs could be 5X of retaining existing ones. Restaurant marketers just could not ignore these numbers. 


With a few strong enterprise case studies under its belt, Punchh was able to garner a large part of the US market with over 200 customers such as Yum Brands, Denny's, El Pollo Loco, and Quiznos. As the market evolves, integration of the complete technology stack driven by data will drive further success. This is where PAR's acquisition of Punchh bringing the best of POS and the best of loyalty/CRM together comes in. We are very pleased with the acquisition of Punchh and wish the team success in its continuing journey to transform the industry.

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