Tabbedout: Follow Austin Tech Start-Up’s Path To Getting Funded

Here’s a staggering fact for you: An estimated 55% of new businesses fail in their first year, many due to a lack of funding. In this article, I’ll discuss what sorts of great ideas receive funding in order to spark ideas for future successful ventures.

Tabbedout Smartphone AppAs the Guardian recently pointed out, there are some truly terrible apps out there. Austin based Tabbedout is not one of them. Tabbedout is a virtual wallet system designed specifically for use in restaurants and bars. The genius of the app is that when successful paired to the bar’s POS (point of sale) system, you can close the tab remotely from your phone, effectively ending the scourge of patrons, waiters and bartenders everywhere – the walked tab.

The young company is in an enviable position of reaching its total funding goal. The reason they’ve reached this milestone is not only because the app is easy to use, but because it solves a common everyday problem for a huge group of people. They’ve also figured out how to make money without charging the app user a cent.

Solve an Annoying, Unglamorous Problem

Tabbed Out is a perfect example of what James Altucher recommended in his TechCrunch piece; an app that solves an unglamorous problem like paying for your food and booze. Tabbedout’s usefulness doesn’t end there, and actually ends up helping out the three separate sides of the service industry:

1. The user of the app will never walk their tab ever again. Leaving your card at a bar is frustrating as you’ll have to cancel and replace it. It’s also unsafe as it’ll be at the mercy of the bar staff- I’ve known ethically challenged bartenders that would add big tips onto walked tabs.Tabbedout Pay When Ready

2. The bar or restaurant no longer has to worry about dealing with walked tabs, which can be costly. The app works especially well at busy restaurants where it’s considered impolite to swipe a card until the end of a meal. “It’s pretty easy. You open a tab just like any other except you push a different button at the end,” says Brett Vance of HandleBar Austin. Austin’s best live music venue Mohawk agrees, and would recommend it to other bars: “[Tabbedout] doesn’t seem to be super well known, but is a great idea, and works.”

3. In most bars and restaurants however, it is the server or bartender who has to “eat” (pay for) a walked tab. This is easily the most annoying thing for those working in the service industry, and most likely to induce a violent rage against those who choose to not pay their bill.

Tabbedout’s commitment to servers is apparent when they introduced a feature that allows restaurants to set a minimum required tip.  For someone getting paid a measly $2.13 an hour, receiving a poor tip is second only to the walked tab in terms of inducing a violent rage.


Have an Instant Revenue Stream

Monetizing apps for the mobile market has always been a tough problem to solve, especially considering the fact that nobody wants to pay for apps. By offering the app free to customers and at cost to bars, there’s an instant cash-flow without turning the bulk of users away with a price wall. With over 600 bars and restaurants currently subscribed, Tabbedout’s revenue doesn’t look like it’s going to dry up any time soon. And with further integration with POS manufacturers, this number of locations accepting Tabbedout is set to climb to as high 10,000.

Moving to Austin Yet?stevierayskyline

The fact that Tabbedout received successive rounds of Series A funding (amounting to over $6 million total) shows that you no longer have to be based out of Silicon Valley to receive serious cash injections. With the arrival of Google fiber in mid-2014, Austin looks more and more like a destination for tech start-ups.

So before taking to the drawing board for your app, ask yourself a few questions; is my app going to make someone’s life easier? Is my app going to make a bunch of different problems go away? Is there a smart way of making money off this thing? And then re-locate to Austin, of course.


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Josh Ebsworth

Content Development & Digital Strategy Intern at
Josh Ebsworth is a recent graduate from the University of Nottingham. He enjoys a great craft beer, photography and (lots of) vintage guitars. Shoot me an email at if you'd be interested in writing or commenting for my series, The Austin Entrepreneur.

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