Bookkeep Raises Another $6.6M to Automate Accounting Entries from Any Platform
Today’s e-commerce merchants have an unprecedented number of different channels they can sell and find customers. While platforms like Shopify, Amazon Seller, eBay, and Etsy open up new revenue opportunities, accounting becomes more complex with the addition of more channels. Payment platforms also introduce an additional layer. Bookkeep is an accounting automation platform for businesses and accounting firms that streamlines the process of recording manual entries. The platform integrates directly with 30 sales, e-commerce, and payment platforms while also processing PDFs, CSV, and Excel files, making the platform capable of handling nearly any system, to get sales and financial data into popular accounting programs like Xero and QuickBooks. It’s estimated that more than $50B is wasted each year on outsourcing of manual ledger entries. Bookkeep plans start at $40/month to automate this process for both business and professional accounting firms while providing daily sales insights and reconciliations.
AlleyWatch caught up with Bookkeep Cofounder and CEO Jason Richelson to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Bookkeep raised $6.6M in a Seed+ round of funding led by Fin Capital, with participation from existing investors TTV Capital, Argonautic Ventures, Lerer Hippeau, Haymaker Ventures, and others. This round brings Bookkeep’s total funding to $10M, following a $3.3M seed round in 2021 led by Lerer Hippeau. The new financing will support product innovation to help accountants and enterprises of all sizes scale their operations through automation. The capital will also help Bookkeep maximize the impact of its new AI technology that processes sales reports from any legacy data format like PDF, CSV, or Excel. Accountants, still today, download these reports and manually enter the data from smaller e-commerce platforms, vertically specialized point of sale, and other payment and sales systems.
Tell us about the product or service that Bookkeep offers.
Bookkeep is an accounting automation platform for independent bookkeepers, accounting firms and growing businesses. Our technology enables professional accountants and bookkeepers to generate accrual-based sales accounting entries and reconcile payment deposits automatically. The platform directly integrates with more than 30 sales, ecommerce, and payment channels such as PayPal, Shopify, and Amazon Seller, and can support other channels via AI processing of PDF, CSV and Excel files. Bookkeep posts daily financials from these channels into accounting systems like QuickBooks and Xero. Professionals who use the Bookkeep platform save 20 hours per month, per client.
What inspired the start of Bookkeep?
In 2018, I recognized that bookkeeping is broken. As a serial entrepreneur who’s personally managed and closed the books for each of my startups, I have a unique insight as a business owner and first-hand experience with payments, point of sale systems, and revenue accounting. It led me to start a business that could improve the way financial data is processed.
Today, the industry is at a tipping point. Accountants are overwhelmed by the volume of digital transactions, and accounting systems don’t address how transactions from multiple sales channels and payment methods are being captured, processed, and reconciled. At the same time, the industry lacks standards for financial reporting and data management, forcing accountants to manually download reports and consolidate the data into their systems. Market research Bookkeep conducted with Paradoxes Inc. earlier this year shows accounting firms lose nearly 100 hours per month, or 2.5 full-time-equivalent weeks, on manual processes across teams. For individual staff members, they are spending nearly a quarter of their time each month on manual work.
Manual data entry is not a scalable solution, especially as it becomes more difficult to find talent willing to do this work. An alarming 93% of accountants say they are under pressure to close the books faster, according to Sage. The only solution to the problems facing the underserved accounting industry is automation – and our team is dedicated to creating technology and new ways of working that eliminate manual data in the industry. Currently, more than 850 small and mid-market retailers and restaurants with billions in annualized revenue use our technology.
How is Bookkeep different?
Bookkeep is the only automation platform designed to offer proper revenue recognition for e-commerce and retail businesses. Bookkeep automates the time-consuming, complex process of posting daily financials from a broad spectrum of sales channels to accounting systems like QuickBooks, Xero, Sage Intacct, and NetSuite. Our technology enables professional accountants and bookkeepers to automatically generate accrual-based summaries, post journal entries, and reconcile payment deposits. We directly integrate with larger sales channels and use AI to process data from the many smaller or niche sales channels in use today.
What market does Bookkeep target and how big is it?
More than $50B is wasted annually on outsourced manual accounting data manipulation, entry, and reconciliation for income and payment reporting.
Nearly 60% of the 1.1M retail-related and accounting firms Paradoxes Inc. surveyed this year are looking for a service that reconciles payment deposits and generates journal entries automatically. Bookkeep’s platform delivers on this need by automating the way data is captured and summarized across multiple sales and payment channels into accounting platforms.
What’s your business model?
In February 2020 Bookkeep began charging customers a monthly fee. Today the pricing model ranges from $40 per month to $320 per month.
How are you preparing for a potential economic slowdown?
Our business is extremely lean but in anticipation of the economic slowdown, we examined every expense and reduced our run rate. We consistently review every company expense on a regular basis to ensure we are delivering value on every dollar spent.
The reality is that accounting is mandatory for businesses. It doesn’t slow down in an economic downturn and accounting professionals are seeking increased efficiency to deliver their services in this type of environment. Businesses of all sizes need timely, accurate financial information in order to achieve efficiencies and improve their operations, most especially in an economic slowdown.
What was the funding process like?
This wasn’t my first venture-funded company, so we had existing relationships with respected VC firms. Most importantly, our team spent two years building a platform that offers proven technology to solve a real problem – that several of our investors have experienced first-hand – and real revenue. Our track record is strong and the demand for our services continues to grow.
What are the biggest challenges that you faced while raising capital?
This is a very different year for fundraising compared to 2021. According to Crunchbase, Venture funding for the third quarter of 2022 totaled $81B, down by $90B (53%) year over year and by $40B (33%) quarter over quarter.
We’ve seen the fundraising timeline get extended – it’s been a much longer, more intense process. Investors are spending more time evaluating companies and implementing rigorous due diligence, which is a positive outcome from our standpoint.
Many VC funds are now refocusing their investments on more well-grounded technology companies focused on solving real-world problems and are therefore likely to grow earnings over time. There is an expectation that startups demonstrate greater financial transparency all the time. Our company is built on this premise and designed to help other businesses maintain accurate records of expense and revenue each month.
What factors about your business led your investors to write the check?
Peter Ackerson, General Partner, Fin Capital:
“As a former CFO, I know first-hand the problems Bookkeep is solving. Meeting with Jason and the team brought back nightmares of dealing with manual data entry and fixing the errors it often causes. Bookkeep is solving an underappreciated problem in the accounting and CFO sector, and we believe the team is well-positioned for long-term growth as the leader in accounting automation as more businesses and accounting firms grapple with the demands and challenges of e-commerce.”
Gardiner Garrard, Cofounder and Managing Partner, TTV Capital:
“This is our second time investing in Jason. We first backed him over a decade ago, when he founded Shopkeep to solve the point-of-sale problems that he was facing as a small business owner. What we saw back then still holds true today: Jason and his team are building a much-needed solution for people who process and analyze transactions on a daily basis. We’re proud to be supporting him again as he brings Bookkeep to accountants everywhere.”
Viken Douzdjian, Managing Partner, Argonautic Ventures:
“As brands connect with and sell to customers via new channels, accounting requirements become far more complex. Accounting teams bear the brunt of this complexity. Bookkeep uniquely understands this issue as a team of CPAs and accounting engineers and built a platform that leverages automation to make accountants more efficient. As commerce continues to move omnichannel, we believe Bookkeep is the secret weapon that enables accountants to stay on top of an exponentially increasing workload.”
What are the milestones you plan to achieve in the next six months?
We have revenue goals as well as expanding our feature set, including being able to handle any data source for our clients. Within six months, we want to expand our capacity to process sales reports from more than 100 different legacy and smaller channels using our new AI processing so that we can handle the entire portfolio of end clients for accounting professionals using our platform.
We have revenue goals as well as expanding our feature set, including being able to handle any data source for our clients. Within six months, we want to expand our capacity to process sales reports from more than 100 different legacy and smaller channels using our new AI processing so that we can handle the entire portfolio of end clients for accounting professionals using our platform.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
In today’s tight economic environment, VC firms are more hesitant to deploy capital and will find more reasons to say no. Burning through cash without showing concrete results or demonstrating sound business management skills is no longer an option. If you want to improve your firm’s chances of raising capital and making it to the IPO finish line, you need to start getting your financial house in order right now.
Where do you see the company going now over the near term?
Our aim is to continue to grow into the sales and payments getaway for all independent bookkeepers and growing businesses. An immediate focus for the team is to offer new AI-driven automation services that meet the needs of larger and more sophisticated accounting firms so they can realize more efficiencies.
SOURCE: AlleyWatch