Not-for-profit voucher website SOS Business has been sold to a US-based company in a $5 million investment guaranteed deal.
The business, which enables consumers to buy vouchers for their favourite cafes and restaurants, was started by New Zealand Trade and Enterprise official David Downs during the first lockdown in his free time as a way to keep small hospitality businesses afloat through the Covid-19 pandemic.
SOS Business started out as SOS Cafe but demand from small businesses outside cafes prompted it to change its name. It has generated more than $2 million worth of sales through about 70,000 vouchers since its inception in March.
The business is set to inject $5 million into the New Zealand economy, part of the purchase agreement and change in ownership to Austin, Texas-based, restaurant investors inKind.
inKind, which has itself set up a similar platform in Australia called Save Hospitality and Serving Hospitality in Canada, will take over the operations of the website to scale and offer more services, including financing and marketing for small firms. Downs will remain in an advisory role.
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SOS Business was an instant success upon its launch and has grown to a database of 2400 businesses, attracting attention from similar organisations throughout the world.
New Zealander of the Year nominee Downs said SOS Business crossed paths with inKind when it was helping an Australian company that already had an arrangement with inKind.
"When we got to the end of lockdown [inKind] asked me what we intended to do with SOS and we said we weren't sure because we didn't really think about the ending when we set it up and they said they would be interested in helping out," Downs told the Herald.
"Because we set it up as volunteers we were all doing it in our spare time and during the first lockdown that was all fine because we had plenty of time, but then we all went back to our day jobs ands we realised this thing needed to keep going because there were so many people that had bought vouchers and needed ongoing customer support."
The business was technically sold for nothing as Downs did not earn anything from the sale - it was sold on the condition that inKind invest $5m into SOS Business.
When the first lockdown finished, Downs thought transactions would die down on the site. Instead, activity has been constant.
Fonterra has bought vouchers for all the farmers in the central North Island and universities and other corporates had also been using the site, he said.
"New Zealand has been extremely successful in its fight against Covid-19, even given the latest setback. We've seen how committed New Zealanders are to tackling this virus together, and also supporting their local businesses," former restaurateur Johann Moonesinghe and founder and chief executive of inKind, said.
"SOS has been a massive help for restaurants, cafes, and other businesses Kiwis love. Our plan is to expand the SOS offering, and help support New Zealanders as they work through another lockdown."
inKind has sold more than $30 million of gift vouchers and helped more than 500 businesses across North America and Australia.
It intends to invest $5m in funding for New Zealand businesses in its first year. The money will be invested through inKind's unique funding model, which provides businesses with upfront capital in exchange for vouchers. inKind then on-sells gift vouchers to customers through the inKind app, which acts as a loyalty platform encouraging long-term engagement with customers.
Downs said SOS Business had been told by "dozens and dozens" of vendors that the platform had saved them from going under and others that they would have to lay off staff without the income.
"When we got to the end of it we thought 'We can't stop, these businesses all needs us, but we've got day jobs' so that's why it's a nice mix to find these people who do this for a job and will add some significant extra value," he said.