In the newly formed entity, Kim Teo, co-founder of Mr Yum, will take on the role of CEO, with Damian Smith, chair of me&u, leading the merged board, and Stevan Premutico, founder of me&u, serving as a non-executive director. Although the exact terms of the merger were not disclosed, it is understood to be a merger of nearly equal parties.
While these Sydney and Melbourne startups have collectively raised an impressive $165 million in venture capital since their founding in 2018, this merger won’t provide an exit for investors at this stage, as it proceeds as an all-stock merger.
The merger is subject to approval by shareholders, but it has gained substantial support from notable figures in the industry.
Initial discussions about the merger were first confirmed in May, following Mr Yum’s announcement of a second round of job cuts, which came after cutting 40 roles in seven months. At that time, Teo stated that her startup’s focus was on achieving profitability with its existing cash reserves.
Mr Yum had a remarkable journey, raising more than $100 million in a short span, with a significant Series A round of $89 million led by US VC giant Tiger Global in November 2021. Its impressive cap table includes notable names such as Steve Baxter’s TEN13, Airtree Ventures, Skip Capital, the family fund of Atlassian co-founder Scott Farquhar and his wife Kim Jackson, Tennis Australia’s Wildcard Ventures, Broadsheet founder Nick Shelton, Australian NBA star Patty Mills, musician Rüfüs Du Sol, and Kogan founder Ruslan Kogan. Along the way, Mr Yum acquired Melbourne startup MyGuestlist and its subsidiary CRM platform, Sprout.
Me&u, on the other hand, secured $30 million in funding in December 2022, in a round led by Acorn Capital, bringing its total funding to $66 million. Its impressive list of backers includes chef Neil Perry, Urban Purveyor Group founder John Szangolies, as well as former Facebook, Uber, MYOB, and Google executives William Easton, Mike Abbott, Tim Reed, and Jason Pellegrino. The app had a stronghold in the Australian pub ordering market, thanks in part to the support of investor Justin Hemmes, CEO of Merivale, who rolled out the app across his hotels empire. Me&u’s dominance is evident with a 70% market share of the country’s top pub groups, compared to 20% for Mr Yum and 10% for other competitors.
The newly merged entity will serve a total of 6,000 venues and generate approximately $39 million in annual revenue from processing orders totaling over A$2 billion in Australia, New Zealand, the UK, and the USA. Furthermore, the business is on track to achieve profitability in 2024 and maintains significant cash reserves. Australia boasts the highest QR code table ordering penetration globally.
Kim Teo expressed that the two competing firms “always had a deep respect for each other” as they vied for market share and will now explore opportunities to expand their services. She also outlined plans for launching new products and features aimed at enhancing interactions between staff and guests, as well as marketing tools to boost foot traffic and revenue.
Stevan Premutico emphasized that the merger represents a rare opportunity to witness two strong Australian companies uniting to tackle the global market.
Robert Routley, CEO of Acorn Capital, praised the merger as an “audacious move” by the founders and shareholders of both companies. He noted that the combined business is now an even more formidable force in driving the global transformation of technology-driven hospitality services. Acorn Capital looks forward to continuing its support for this remarkable Australian success story.