$4.9 Billion Food-delivery Software Files for IPO, Booming Industry Toes the Line of ‘Qualified Trade’

Toast QSBS

Toast, Inc. is a technology company which allows restaurants to handle in-person, online, and mobile app payments. They plan to raise $100 million in their upcoming initial public offering (IPO). 

They filed for their initial public offering last Friday with the SEC and could end up with a valuation around $20 billion due to the listing. 

As restaurants rebound from the pandemic, they are seeing quite a roller coaster. Many restaurants struggled to keep up with the delivery and takeout demand that occurred during lockdown and now that vaccines are widely available and restrictions are loosening, smaller restaurants aren’t staffed to handle the increase in customers

Regardless of where people are eating their restaurant favorites, companies like Toast are benefiting. Another food-ordering platform, Olo Inc. is up 90% since its IPO in March. 

What is Toast?

Toast boasts an easy-to-use software that restaurant workers can use for in-person dining and takeout diners can use independently on their phones. It offers the benefits of data capture and loyalty programs to all users. 

“Running a restaurant is tough,” co-founders Aman Narang, Steve Fredette, and Jonathan Grimm said in the prospectus. 

“We started Toast to make restaurant work a little easier.” 

The company caters to 48,000 restaurants and averages 5.5 million orders per day. They received a valuation of $4.9 billion last year and their offering is backed by Goldman Sachs Group, Inc., Morgan Stanley, and JP Morgan Chase & Co.

Technology Companies and QSBS

One of the factors for Qualified Small Business Stock eligibility is that a company must be actively participating in a qualified trade. While Section 1202 outlines some industries that would not qualify, restaurants, health, and consulting, the rise of technology based companies who develop software and platforms to be used by other businesses and consumers have opened the doors to qualifying for QSBS in a variety of industries. 

This is great news for QSBS investors who can exclude up to 100% of the capital gains on qualified stock from federal taxes. 

See how the IRS has considered other tech companies in terms of QSBS qualification.

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

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