American Express quietly acquired UK fintech startup Cake for $13.3M – TechCrunch

Cake Technologies, the U.Okay. fintech startup that wished to make it extra handy to pay your restaurant or bar invoice, has been acquired by American Express — because the bank card behemoth plans to beef up its cost choices for Amex members.

According to sources the deal quietly accomplished in October final yr for a last worth of $13.three million (approx. £10.1m). However, as a consequence of an eleventh-hour preferential debt spherical and after charges, just some shareholders made a revenue. I additionally perceive from one supply that Cake had raised a complete of £four.5 million in fairness and £1.four million in debt. Part of the fairness funding was a £1 million crowdfunding spherical on Crowdcube in 2015.

Confirming the acquisition, American Express gave TechCrunch the next assertion:

Last yr American Express acquired Cake Technologies. This yr, we can be on-boarding Cake and their applied sciences to collaborate on methods to offer our Card Members with enhanced service and worth within the eating house, which is an space lots of our Card Members are obsessed with.

A spokesperson for American Express declined to touch upon the precise monetary phrases of the deal, however mentioned that it was a “good outcome for Cake employees, previous investors and American Express”. They did affirm, nonetheless, that Cake workers are actually workers of American Express.

This contains Cake founders Charlotte Kohlmann and Michelle Songy, who maintain the positions of Vice President Global Dining Platform Solutions at American Express, and Director Global Platform Dining Solutions at American Express, respectively.

“We are excited to have Cake on board with us and look forward to collaborating on bringing our Card Members exciting new capabilities in the dining space soon,” provides the American Express spokesperson.

The again story to Cake’s eventual exit makes for fascinating studying. According to a supply with information of the startup’s path to a sale, who spoke to TechCrunch on the situation of anonymity, it was very near elevating a £5 million Series A within the fall of 2016 earlier than the corporate’s founders walked away for “ethical reasons,” though the supply declined to diverge what these have been. This then left Cake in a precarious scenario financially as the corporate couldn’t discover one other VC to step in rapidly sufficient earlier than operating out of money.

In the vacations/early 2017, the board of Cake put collectively a rescue spherical that was structured within the type of debt and designed to present the startup extra runway to attempt to obtain a commerce sale. All present shareholders got the prospect to take part on a professional rata foundation, though some declined because of the substantial danger of doubling down.

The mortgage was additionally structured in order that, ought to the corporate get acquired, these eleventh hour buyers would get a a number of preferential return. This, I’m advised, explains why some buyers made cash from the exit, whereas others, together with some Crowdcube backers, misplaced cash, even probably after factoring in EIS tax breaks.

In May 2017, American Express first made a proposal to accumulate Cake. The startup handed due diligence in late June, however American Express pulled the deal in mid-July for unknown causes. Determined to get the sale again on observe, Cake co-founder Kohlmann flew to New York unannounced and the deal ultimately closed in October.

“Despite the complications and lengthy process, Amex did a really good deal here,” says my supply. “It is clear that Cake is now a very important part of their digital strategy and the purchase price looks like good value in that context. Cake’s user experience will be a benefit to users of the Amex app once fully integrated and Cake’s basket level POS integrations will give Amex better insight into exactly what products their customers are buying rather than just where they go and how much they spend”.

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