Tag: accounting

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Corporate services “super app” Osome lands $16M Series A

Osome, a startup that combines multiple corporate services for SMEs into one “super app,” has raised a $16 million Series A. The round included returning investors Target Global, AltaIR Capital and Phystech Ventures, and new backers S16VC and venture capitalist Peng T. Ong, who joined as an angel investor.

The Singapore-based startup’s last funding round was $3 million announced in November. Its Series A brings Osome’s total funding since it was founded in 2017 to $24.5 million. It now claims to be used by 6,000 companies in Singapore, the United Kingdom and Hong Kong, giving it $9.5 million in annual recurring revenue and 100% year-over-year revenue growth.

Its Series A will be used on international expansion and product integrations. Osome, which employs a total of 200 people, has seen fast adoption by e-commerce companies in particular, and plans to launch more products and apps for the sector over the next 18 months.

Singapore-based digital business assistant Osome raises $3 million

Co-founder and chief executive officer Victor Lysenko told TechCrunch that the company started “looking at the e-commerce segment some time ago, but wanted to be confident that our product can handle the increased complexity and transaction volume of e-commerce businesses before launching marketing. The pandemic has caused the e-commerce industry to grow significantly faster and that was also a factor for us.”

He added that Osome will add integrations with multiple e-commerce platforms and administrative services, with the goal of cutting hours out of the time e-commerce company owners spend on accounting each week.

Osome’s flagship product is online accounting services for SMEs, connecting companies with chartered accountants. It also offers corporate secretary services, including business registration, compliance and taxation. The platform uses machine learning tech to automate many tasks—for example, it categorizes, tags and stores documents, creates management reports and tax returns and files paperwork on time.

Lysenko said entrepreneurs on average spend 68% of their time dealing with back-office tasks, instead of strategizing their company’s goals. Osome is meant to reduce the burden of administrative work on small businesses and demand for its services grew during the pandemic as companies moved more of their operations online.

Singapore makes it relatively easy to incorporate businesses online, so several other startups in the same space are based there. These include Sleek, Lanturn and BlueMeg, all focused on automating accounting and other time-consuming tasks for SMEs.

In a statement about the funding, S16VC co-founder Aleks Shamis said, “I’ve done business with small and medium e-commerce in 10 countries and see the same inefficiencies in manual accounting across all of them. It is a real problem that will definitely be solved, and Osome is technologically and traction-wise among the few companies in the world in getting there.”

Once a buzzword, digital transformation is reshaping markets

 

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Ex-Square execs launch Found to help the self-employed, raise $12.75M from Sequoia

If you’ve ever been self-employed you know what a pain it is to keep up with the hassles of running a business. From bookkeeping to invoicing to paying taxes — it’s one big headache.

Freelancers and self-employed people often turn to a number of different solutions to try and address different aspects of running their business. It can be a lot to keep up with.

Enter Found. Previously called Indie, the startup was founded by two former Square execs who got firsthand insight into how SMBs paid their employees.

Lauren Myrick joined Square in 2010 and was the second project manager at the company. She helped launch its first POS (point-of-sale) product and its SaaS products. She eventually became GM of its payroll business unit, and that was her first foray into taxes and understanding their implication. Co-founder Connor Dunn ran engineering for Square Payroll.

After that experience, the pair saw an opportunity to launch a suite of services for self-employed businesses, which have been growing even faster during COVID.

“We started to pay attention to the movement toward self-employment,” Myrick told TechCrunch.

So in 2019, the pair interviewed “lots” of self-employed people to better understand their pain points. What they found is that taxes and expense tracking were considered among the more painful and expensive parts of being self-employed. So they formed Found (formerly called Indie) with the goal of creating a “one-stop shop” for business banking, bookkeeping and taxes for self-employed businesses.

And today, the San Francisco-based startup has raised $12.75 million in a round led by Sequoia that also included participation from some angel investors.

Image Credits: Found co-founders Lauren Myrick and Connor Dunn / Found

Myrick is no stranger to being self-employed herself, having worked as a public accountant after college. Also, her sister is a self-employed yoga instructor.

In Found, Myrick’s two previous professional worlds have come together. 

“With my accounting background and what I learned at Square, I had this big aha moment that we could become a ledger for these businesses, and solve their bookkeeping and tax needs through software,” she said. “So that’s what we’ve built.”

Customers can use the platform to do things like deposit business income, obtain a debit card for business purchases and calculate how much they owe in taxes. The platform also offers a feature that sets aside the money for, and facilitates, the quarterly tax payments, for example. It also offers real-time business and tax reports, so when a business owner swipes their card, expenses are reflected in real time.

6 VCs share their bets on the future of work

Sequoia’s Josephine Chen and Alfred Lin said they were impressed with Myrick from their first call with her.

“Lauren has incredible context and command of the details. She talked about the hoops self-employed people have to jump through to fill out their Schedule Cs; she explained some of the finer points of different tax codes — and we were riveted,” the pair say.

Lin said he was particularly intrigued by the concept of Found because while he was in graduate school he ran a small data analysis business on the side.

“I had to invoice, report on taxes and do my own bookkeeping,” he recalls. “And I kept it together with a spreadsheet. I thought to myself that there should be better tools to do some of this stuff. And that is what Lauren has done with Found.”

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Docyt raises $1.5M for its ML-based accounting automation platform

Accounting isn’t a topic that most people can get excited about — probably not even most accountants. But if you’re running any kind of business, there’s just no way around it. Santa Clara-based Docyt wants to make the life of small and medium business owners (and their accounting firms) a bit easier by using machine learning to handle a lot of the routine tasks around collecting financial data, digitizing receipts, categorization and — maybe most importantly — reconciliation.

The company today announced that it has raised a $1.5 million seed-extension round led by First Rays Venture Partners with participation from Morado Ventures and a group of angel investors. Docyt (pronounced “docket”) had previously raised a $2.2 million seed round from Morado Ventures, AME Cloud Ventures, Westwave Capital, Xplorer Capital, Tuesday and angel investors. The company plans to use the new investment to accelerate its customer growth.

At first glance, it may seem like Docyt competes with the likes of QuickBooks, which is pretty much the de facto standard for small business accounting. But Docyt co-founder and CTO Sugam Pandey tells me that he thinks of the service as a partner to the likes of QuickBooks.

Image Credits: Docyt

“Docyt is a product for the small business owners who find accounting very complex, who are very experienced on how to run and grow their business, but not really an expert in accounting. At the same time, businesses who are graduating out of QuickBooks — small business owners sometimes become midsized enterprises as well — [ … ] they start growing out of their accounting systems like QuickBooks and looking for more sophisticated systems like NetSuite and Sage. And Docyt fits in in that space as well, extending the life of QuickBooks for such business owners so they don’t have to change their systems.”

In its earliest days, Docyt was a secure document sharing platform with a focus on mobile. Some of this is still in the company’s DNA, with its focus on being able to pull in financial documents and then reconciling that with a business’ bank transactions. While other systems may put the emphasis on transaction data, Docyt’s emphasis is on documents. That means you can forward an emailed receipt to the service, for example, and it can automatically attach this to a financial transaction from your credit card or bank statement (the service uses Plaid to pull in this data).

Image Credits: Docyt

For new transactions, you sometimes have to train the system by entering some of this information by hand, but over time, Docyt should be able to do most of this automatically and then sync your data with QuickBooks.

“Docyt is the first company to apply AI across the entire accounting stack,” said Amit Sridharan, founding general partner at First Rays Venture Partners. “Docyt software’s AI-powered data extraction, auto categorization and auto reconciliation is unparalleled. It’s an enterprise-level, powerful solution that’s affordable and accessible to small and medium businesses.”

Ageras nabs $73M at a $244M valuation for its accountancy marketplace and bookkeeping tech stack

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Singapore-based digital business assistant Osome raises $3 million

Osome’s founding team, Anton Roslov, Victor Lysenko and Konstantin Lange

Osome’s founding team, Anton Roslov, Victor Lysenko and Konstantin Lange

Osome, a Singapore-headquartered business assistant app that digitizes accounting and compliance tasks, has raised $3 million. An extension of Osome’s seed round, the new funding was led by XA Network and AltaIR Capital.

The startup currently has about 4,500 SME clients across Singapore, Hong Kong and the United Kingdom, founder and chief executive officer Victor Lysenko told TechCrunch. The new funding brings Osome’s total raised to $8 million from investors including Target Global. “We are in a good place in terms of cash reserves and operational performance so we used this opportunity to raise funding before a much larger Series A planned for 2021,” Lysenko said.

When the startup launched in 2018, he said it reached $1 million in annual recurring revenue (ARR) by the end of the year, then increased that amount to $4 million in December 2019. Osome expects to hit $8 million ARR by the end of this year.

Osome’s platform uses machine learning-based tech to automate administrative, accounting, payroll and tax-related work. Depending on subscription tier, it also gives businesses access to chartered accountant services.

Osome's digital business assistant

Osome’s digital business assistant

The startup started two years ago in Singapore, where it also offers incorporation services, before expanding to the United Kingdom and Hong Kong.

Lysenko told TechCrunch that Osome launched in Singapore because the country’s “simple business rules and a simple tax system allowed us to offer clients a ready-made solution quickly.” The city-state’s small size also made it easier to get quick client feedback and arrange partnerships.

Osome is now looking at Australia as a potential new market, because of its proximity to its Singapore headquarters and its similar accounting and corporate service rules.

Lanturn, a Singaporean tech-enabled corporate services provider, raises $3 million seed round

Thanks to the country’s relatively digital and streamlined process for incorporating businesses, several other tech-based business service platforms are also based in Singapore. These include Sleek, Lanturn and Bluemeg. Despite competing with each other, Lysenko said the number of companies “is an excellent support for our thesis that this market is ripe for disruption.”

“Having said that, we believe that while all our competitors are looking at this space from a digital perspective, our special sauce is that we digitize the process to a much deeper extent and do not rely on third-party solutions as much as others do,” he added.

The COVID-19 pandemic and lockdowns prompted some companies to start using Osome, particularly in the e-commerce segment. About one in 10 of Osome’s clients earn most of their revenue online, and that share is growing, Lysenko said.

“We found ourselves in a very stable industry,” he added. “We saw a slight 10% drop in revenue in April and May, but in June, growth resumed, and we returned to our previous trajectory. We have tripled our revenue in the last 12 months.”

Sleek lets companies incorporate and operate in Singapore — without the pain of paperwork

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R&D tax credits are due July 15th. Neo.tax wants to help startups apply, and raised $3M to do it

All founders love “free” money, but with the global pandemic going on, the necessity of free money has taken on a whole new meaning this year. First, there was the scramble to secure PPP loans a few weeks back for U.S.-based startups, and then the second wave of PPP loans when Congress offered a second tranche of funding. Two weeks ago, I covered a company called MainStreet, which is helping startups apply for local economic development credits which cities offer to businesses relocating to their regions.

Free money for startups? It’s possible with MainStreet’s platform for economic development incentives

In the same vein, Neo.tax wants to help startups secure R&D research credits from the federal government — which tend to be fairly easy to acquire for most software-based startups given the current IRS rules for what qualifies as “research.”

The free money is good, but what sets this startup apart is its ambitious vision to bring machine learning to company accounting — making it easier to track expenses and ultimately save on costs.

It’s a vision that has attracted top seed investors to the startup. Neo.tax announced today that it raised $3 million in seed funding from Andy McLoughlin at Uncork Capital and Mike Maples at Floodgate, with Michael Ma at Liquid2 and Deena Shakir at Lux Capital participating. The round closed last week.

Neo.tax was founded by Firas Abuzaid, who spent the past few years focused on a PhD in computer science from Stanford, where he conducted research in machine learning. He’s joined by Ahmad Ibrahim, who most recently was at Intuit launching small business accounting products; Stephen Yarbrough, who was head of tax at Kruse Consulting, a popular consultancy for startups on accounting and financial issues; and Leonardo De La Rocha, who was creative director of Facebook Ads for nearly five years.

Neo.tax’s Stephen Yarbrough, Firas Abuzaid, and Ahmad Ibrahim. Photos via Neo.tax

Or in short, a perfect quad of folks to tackle small business accounting issues.

Neo.tax wants to automate everything about accounting, and that requires careful application of ML techniques to an absolutely byzantine problem. Abuzaid explained that AI is in some ways a perfect fit for these challenges. “There’s a very clearly defined data model, there’s a large set of constraints that are also clearly defined. There’s an obvious objective function, and there’s a finite search space,” he said. “But if you wanted to develop a machine-learning-based solution to automate this, you have to make sure you collect the right data, and you have to make sure that you can handle all of the numerous edge cases that are going to pop up in the 80,000 page U.S. tax code.“

That’s where Neo.tax’s approach comes in. The software product is designed to ingest data about accounting, payroll, and other financial functions within an organization and starts to categorize and pattern match transactions in a bid to take out much of the drudgery of modern-day accounting.

One insight is that rather than creating a single model for all small businesses, Neo.tax tries to match similar businesses with each other, specializing its AI system to the particular client using it. “For example, let’s train a model that can target early-stage startups and then another model that can target Shopify businesses, another one that can target restaurants using Clover, or pizzerias or nail salons, or ice cream parlors,” Abuzaid said. “The idea here is that you can specialize to a particular domain and train a cascade of models that handle these different, individual subdomains that makes it a much more scalable solution.”

While Neo.tax has a big vision long-term to make accounting effortless, it wanted to find a beachhead that would allow it to work with small businesses and start to solve their problems for them. The team eventually settled on the R&D tax credit.

“That data from the R&D credit basically gives us the beginnings of the training data for building tax automation,” Ibrahim explained. “Automating tax vertical-by-vertical basically allows us to be this data layer for small businesses, and you can build lots of really great products and services on top of that data layer.“

So it’s a big long-term vision, with a focused upfront product to get there that launched about two months ago.

For startups that make less than $5 million in revenue (i.e. all early-stage startups), the R&D tax credit offers up to a quarter million dollars per year in refunds from the government for startups who either apply by July 15th (the new tax date this year due to the novel coronavirus) or who apply for an extension.

Neo.tax will take a 5% cut of the tax value generated from its product, which it will only take when the refund is actually received from the government. In this way, the team believes that it is better incentive-aligned with founders and business owners than traditional accounting firms, which charge professional services fees up front and often take a higher percentage of the rebate.

Ibrahim said that the company made about $100,000 in revenue in its first month after launch.

The startup is entering what has become a quickly crowded field led by the likes of Pilot, which has raised tens of millions of dollars from prominent investors to use a human and AI hybrid approach to bookkeeping. Pilot was last valued at $355 million when it announced its round in April 2019, although it has almost certainly raised more funding in the interim.

Index Ventures, Stripe back bookkeeping service Pilot with $40M

Ultimately, Neo.tax is betting that a deeper technical infrastructure and a hyper-focus on artificial intelligence will allow it to catchup and compete with both Pilot and incumbent accounting firms, given the speed and ease of accounting and tax preparation when everything is automated.

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Silverfin wants to modernize accounting software with its cloud service

Meet Silverfin, a startup focused on accounting software. This isn’t about helping small startups handle accounting tasks themselves. Silverfin wants to build the cloud service for small and big accounting firms — Salesforce, but for accounting.

The startup just raised a Series B funding round led by Hg — Index Ventures led the previous Series A round. While terms of the deal are undisclosed, a source told me the round is worth approximately $30 million.

In order to improve productivity, Silverfin tries to automate the most time-consuming aspect of accounting — data collection. The company helps you connect with your clients’ accounting software directly to import their data, such as Xero, QuickBooks, Sage and SAP.

After that, Silverfin standardizes your data set and lets you add data manually so that the platform can become the main data repository.

Once your data is in the system, you need to process it. Silverfin lets you configure automated workflows and templates so that anybody in the accounting firm can enrich data and check for compliance issues. Like Salesforce and other software-as-a-service products, multiple people can communicate on the service and look at all past edits and changes.

You can then visualize financial data, generate reports and statements. It opens up new possibilities for accounting firms. They can charge advisory services thanks to analytics tools and an alert system.

The startup was founded in Ghent, Belgium, but it has now expanded to London, Amsterdam and Copenhagen. Silverfin has attracted 650 customers, including big accounting firms in Europe and North America.

By targeting the most demanding customers first, Silverfin doesn’t need to replace Xero or QuickBooks altogether. It can integrate with those existing software solutions first. There’s an opportunity to go downmarket later and convince smaller companies that don’t necessarily have a big accounting team.

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Pennylane is an accounting service that improves your financial visibility

Meet Pennylane, a new French startup that is a building a full-stack service to deal with your financial data. With Pennylane, you get a real-time view of your financial data and you don’t have to work with an accounting company — the startup hires accountants for you.

The startup just raised a $4.3 million (€4 million) seed round with Global Founders Capital, Partech and Kima Ventures. Pennylane’s founders previously worked on PriceMatch, a startup that was acquired by Booking.com in 2015.

“We invested in 25 to 30 startups — we went to see them and asked them what was missing,” Pennylane co-founder Arthur Waller told me. The team realized that there was a big discrepancy between accountants and CEOs.

Many companies work with third-party accounting companies but don’t see the direct benefits of that relationship beyond complying with the law. And yet, accountants have access to all the financial data of the company.

Usually, accountants receive data once a month in a very unstructured way. They waste a ton of time entering data in accounting software. As for companies, a CEO doesn’t know how to use accounting software and can’t take advantage of the accountant’s work to see if there’s any outstanding invoice, if clients haven’t been billed or how your company is doing financially.

That’s why many companies end up using Excel for financial projections and visibility. It’s a big waste of time as you need to connect to multiple services to download invoices, receipts, pay slips and more.

Pennylane aggregates all your financial information using APIs. You set it once and your data is automatically fetched in Pennylane. For instance, you can connect your Pennylane account with your bank account, Stripe, GoCardless, Revolut, PayFit, etc. And if you store your invoices on Google Drive, you can also connect Pennylane with your Google Drive account.

The service then tries to go through this data set on its own as much as much as possible. The company uses optical character recognition and pre-fills accounting information. The result is that companies get a clear overview of their financial data.

“Software alone isn’t going to solve that problem,” Waller said. So Pennylane has hired eight accountants who can check data, correct information if there’s anything wrong and make sure you comply with the law.

By saving time on data entry, accountants can focus on other tasks that they couldn’t handle in the past. “We want to provide a service at the same price as a traditional accounting service but that is ten times better,” Waller said.

The company started accepting customers in March and now has 117 customers, such as Luko, Liberkeys and Pricemoov. Pennylane targets medium companies, those that need to outsource their accounting because it is too complicated but don’t have an in-house accountant.

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Everee raises a $10M Series A to scale its worker-friendly payroll software service

This morning Everee, a Utah-based software as a service (SaaS) startup focused on payroll, announced that it has closed a $10 million Series A. The funding event was led by Origin Ventures and Signal Peak Ventures. Previously, Everee had raised a $3.7 million Seed round in mid-2019.

The company is therefore as well capitalized as it has been in its life, right as the economy enters a rough patch. TechCrunch spoke with one of the company’s founders, Ron Ross, and its new CEO Brett Barlow (formerly of Utah unicorn Pluralsight), about the new capital and what it plans on doing with it.

Payroll

According to Ross, the company was founded out of a problem he saw in the market. When his daughter went to college and started working she earned enough to cover her expenses, but her income timing didn’t match her cash flow needs, so she had to ask her parents for occasional loans. Ross wasn’t stoked by the situation, until he dug into it more closely and found that the payroll system of today doesn’t always match well with the cash needs of workers.

And thus Everee was born, a SaaS tool that handles payroll with a neat twist. Instead of paying workers merely every two weeks, the service offers more flexible payout options. Its lower-cost service lets workers select twice-weekly, every two weeks or monthly payouts. Its more expensive service lets workers cash out their earnings on a daily or weekly basis, as well.

This might sound odd, but it makes sense; why should workers’ wages be tied up for weeks until they receive them? That’s stupid as heck. If you work, you should get paid right away. That would be more worker-friendly and sensible, and with modern banking, it should be common.

Everee also does what you’d expect from a payroll service, like onboarding, timecard management and the rest. I was a little surprised by its price point, which starts at $15 per worker per month for its cheaper service ($10 per month with more employees), but the company told me that it’s priced largely in line with competition.

Before we close, a financial wrinkle. Everee doesn’t change a company’s cash flow if its workers decide to cash out earnings more rapidly than what’s normal. Instead, it covers the cash flow changes itself, using a credit facility. The firm then eats that cost of capital as cost of revenue (COGS), meaning that to offer its pay-when-you-want-to-get-paid it takes a gross margin hit. Why does that matter? It means that Everee is changing its revenue quality to offer a neat service. This isn’t a knock, more of a note. Everee is, to a degree, shaving about 5 points off its gross margins, according to its executives, so that workers can get paid more promptly.

To be clear, Everee is a SaaS business with likely attractive economics, but I’m a sucker for tooling that helps working people, and thus wanted to highlight how the system works.

Finally, how will Everee approach growth in a market where hourly workers are being laid off around the nation? When TechCrunch spoke to the company, it noted there are a host of workers still employed, including folks working at grocery stores and other critical pieces of infrastructure. It will still have a market to grow into, or at least the cash to float itself until the employment market comes back.

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Paro raises $10 million series B to offer corporate finance expertise on demand

As any CFO can attest, corporate finance is extraordinarily complicated. From tax preparation, to financial controls, to cash flow estimation and more, the finance department of any major company often has to turnaround sophisticated analyses with extreme attention to detail — and quick.

Most of the time, businesses outsource at least part of those financial functions to the big four accounting firms or to smaller firms, but as with all consulting firms, getting contracts signed and work underway can take significant time and effort.

That’s where Paro comes in. The Chicago-based expert marketplace wants to provide corporate clients with on-demand sophisticated expertise across a range of financial functions.

The company announced today that it has raised a $10 million series B venture capital round led by Mark Fernandes of Sierra Ventures. Existing investors Revolution Ventures, KGC Capital, and Tom Williams also participated.

When we last checked in with Paro 18 months ago, it had just raised a $5 million series A from Clara Sieg at Revolution. Since that time, the marketplace has continued to expand, and CEO and co-founder Michael Burdick says that the company is increasingly zero-ing in on the types of clients that best match the platform’s offerings.

Taking on the Big 4 accounting giants, Paro receives $5m for its labor marketplace for financial professionals

“The cognitive load is huge,” Burdick explained for companies trying to find this talent on existing marketplaces. “You’re posting project descriptions, you’re wading through all these mountains of unfiltered proposals, you’re having to shortlist candidates.” That often leads CFOs right back to the incumbent accounting firms, since they are much more plug-and-play.

Paro has taken a different tact, focusing instead on recruiting and retaining the highest-quality financial talent on its marketplace. The company has built out and continues to improve tools to help the marketplace’s experts focus on the work that makes them unique rather than the drudgery that can come as part of their jobs. We’re “automating a lot of their back office functions [and] giving them workflow automation tools to make them more productive and efficient and earn more,” Burdick said. He dubbed this the “freelancer operating system.”

Sieg of Revolution also noted that the pursuit of quality has been beneficial for Paro’s bottom line. “Unlike a consulting gig, where it’s a one-time analysis and a sort of lumpy engagement, you need monthly financials, you need annual tax reporting, you need audit work, and so these are really ongoing relationships,” she said. That “gets us away from some of the informal problems that you’ve seen in labor marketplaces, which is really high customer acquisition costs, and relatively low take rates, and not very much recurring business.”

As Paro scales, Burdick sees an opportunity to leverage the firm’s data network effects to build a moat around its business. “There is inherently a wealth of data at our fingertips that we’re leveraging, giving back to the freelancers and the clients,” he said.

Online labor marketplaces targeting business functions have grown dramatically in popularity in recent years, with companies like Pilot raising large rounds of venture capital. Burdick says that Paro differentiates from bookkeeping services like Pilot by focusing on elite financial talent which ultimately leads to higher margins.

Index Ventures, Stripe back bookkeeping service Pilot with $40M

The company intends to use the capital to continue expanding its product and sales staffs.

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ZenBusiness raises $10m to help founders launch and grow “worry-free”

There are two sides to starting a new business. On one side, entrepreneurs need creativity, imagination — a dream, essentially — to find, build, and market a new product to users and consumers. But on the other side, they have to deal with the regulatory state and all the minutia that comes with running any business in the 21st century.

That includes such delightful topics as choosing a particular model for incorporation, ensuring that a business has the right licenses to operate, and tracking all the legal changes happening in 50 state legislatures every year. It can be inordinately complicated (and expensive!) to ensure that your business is ready and legal.

That’s where ZenBusiness comes in. The Austin-based startup wants to empower entrepreneurs to build businesses large and small by dramatically simplifying the processes required to launch a business and then grow it.

When I last chatted with the company 18 months ago, they had just raised a $4.5 million seed round and had launched its platform. Today, it’s announcing that it has raised a new $10 million series A round led by return backer Greycroft, along with returning investors Lerer Hippeau and Revolution’s Rise of the Rest fund, alongside new investors Rosecliff Venture Partners, Interlock Partners and Recruit Strategic Partners.

ZenBusiness raises $4.5m to help launch one million small businesses by 2023

The company launched with a product that was essentially an automated registered agent for new entrepreneurs. Under state incorporation laws, companies must designate a so-called “registered agent” to receive official notices from regulatory agencies, and so ZenBusiness chose this strategic point for entry into the market.

When I last chatted with CEO Russ Buhrdorf, he described rolling up this market as one of the key initial targets for the company:

ZenBusiness is the brainchild of Ross Buhrdorf, who joined vacation rental marketplace HomeAway five months after its inception as founding CTO, and stayed for a decade until its acquisition by Expedia in 2015 for $3.9 billion. Buhrdorf intended to take a year off, but “didn’t quite make it a year” he told me.

He explained to me that HomeAway in many ways followed a rollup playbook, “raising $400 million and acquired 26 companies.” Bringing that rollup lens while exploring new spaces, he ran into the corporate legal services market, which offers help to companies to keep them in compliance with the law. Buhrdorf liked what he saw. “It’s different in all 50 states, highly-regulated, which is great for technology, it is overpriced, and they underserve their customers.” He says the space is “completely ripe for disruption.”

Since that time, the company has expanded its product to help entrepreneurs get beyond merely incorporating to actually building out their business by recommending services like banking, lending, tax preparation, website building, and more. The hope is to provide a “worry-free” guarantee to entrepreneurs so that they can get those early critical logistics out of the way and back to actually operating and growing their business.

“Small businesses come through this funnel, they don’t necessarily know exactly what to do. So we curate that solution, and then we provide them with the basics for them to get up and running and to be successful,” Buhrdorf said.

He explained that the company has built out some tools itself such as a simple webpage creator, but in the long run, he hopes to partner with other providers who integrate into the ZenBusiness platform. For instance, ZenBusiness has partnered with Xero as the company’s main accounting provider, while also backstopping that offering with accountants working at ZenBusiness. The idea is that the automated tooling plus a little human touch can help most owners handle the day-to-day challenges of running a business.

TeamPhoto2018

The ZenBusiness team in 2018. Photo via ZenBusiness.

Buhrdorf is particularly focused on keeping the product very self-service and automated to allow it to focus on these smaller customers. “Many of the companies that you cover that are in the enterprise space, who provide solutions for medium-sized businesses, they have to charge, they have to have sales forces, it’s very competitive there,” Buhrdorf said. “What we’re after is the segment that’s underserved, it’s the long tail of the small business segment.”

ZenBusiness has expanded its services, and it is hoping to use the fresh infusion of capital to invest in building out community features that will allow small business owners to swap tips with each other and help one another grow their businesses (presumably with some guidance from ZenBusiness community managers and experts).

The company is now 40 employees predominantly in Austin with a small office in Peru. Since we last checked in, the company has transitioned to become a public benefit corporation, which Buhrdorf said was an attempt to better align the company’s charter with its mission orientation to help small business entrepreneurs.