An EPOS valuation that makes you go “Mmmm”

A new cloud-based iPad EPOS business called Shopwave is raising money on CrowdCube.

Shopwave claims just 50 locations live but is 45% of the way to raising £200K for just 6.7% of the business. This gives a valuation of £3m.

In stark contrast, K3 bought Retail Technology Ltd last month for just £800K. This was for a solidly profitable EPOS business that’s been trading for years and has 180 customers.

Shopwave is currently burning £5.5K per month and reckons it will need another £1.5m cash in 2015. With this investment, it forecasts 2016 revenues of £8m with net profit of £1.6m.

Let me share some more numbers with you.

Cybertill was first into the cloud EPOS market in the UK. It’s an exceptionally well run company with solid technology and wide distribution. In ten years, it’s got to £6m turnover and £380K operating profit.

There are solid profits to be add in this corner of the retail technology market but it moves slowly. The customers are very conservative and most already have a functioning EPOS of some kind. Churn is low.

To Shopwave’s credit, it is bringing a very open approach to EPOS and highlights its ability to easily integrate any 3rd party applications its customers may desire. Retailers will like this just as much as they dislike the stiff development fees charged by Micros and friends. But it’s not unique. Clover is building a retail app store (see earlier post) and has First Data’s millions behind it.

Beyond Clover, there’s a multitude of well funded competitors coming over the hill with similar pitches about transforming retail with iPad EPOS. How about Vend ($30m in the bank and just setting up in the UK), Lavu or Revel? Then, there are the e-com guys building EPOS on the back of Magento like Ebizmarts which will likely hoover up the small but ambitious multi-channel retailers.

Caveat Emptor.

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