Catching the perfect wave at the right time while surfing is a nearly magical experience. At the optimum slope, everything else falls into place. The same is true for startups—finding technology waves and timing them well is an immutable law of success. This thinking is embedded in the way we approach investing. We constantly look for teams that are uniquely positioned to catch massive waves and ride their momentum.
As Bench launches in Canada and announces its latest growth financing, we thought we’d share our perspectives on huge waves the company is riding and shed some light on the rationale supporting our decision to lead the round.
To provide a bit more context, Bench has rapidly built the largest online bookkeeping service for SMBs in North America, tapping into a market easily worth more than $10B in annual revenues based on today’s spend. In fact, one in 100 working Americans can be categorized as a bookkeeper. The company has developed deep domain expertise while enhancing human labour with AI, and ultimately layering on automation to delight customers—as evidenced by an excellent NPS.
As with any great technology company, there is also a strong visionary leader at Bench. Since meeting Ian Crosby (CEO & co-founder) back in 2012, we kept finding ourselves impressed by his ability to distill bookkeeping into a system of equations and to balance his instincts with data. Ian is a contrarian in many respects, working from first-principles to test hypotheses and find the approaches that work for Bench.
In more recent months, Ian attracted an impressive lineup of seasoned executives to support the company’s next phase of growth and capitalize on automation in a big way. The team also secured distribution partnerships with top-tier SMB players such as Shopify, Gusto, Stripe, BofA, Mindbody and Freshbooks, to name a few. After seeing those patterns firm up, engaging with the team at a deeper level and aligning on a shared vision of success, we jumped onboard.
Our core beliefs around the waves Bench is riding can be summarized as follows:
- Bookkeeping will not be performed by humans in 10 years. In the future, a handful of software players will own automation technologies that will absorb the market for human bookkeeping. That being said, full automation today cannot delight customers. Bench bridges this gap by providing its own bookkeepers with technology that makes them increasingly efficient.
- The consumption of B2B SaaS products is consumerizing and is reshaping how digital services are delivered to businesses. We believe that the next generation of entrepreneurs will seek to subscribe to B2B services in the same way they subscribe to Netflix.
- While these new entrepreneurs are more productive with technology, they are also busier than ever. They fully appreciate how low-value administrative tasks can be offloaded to trusted online service providers. This quest for automation will create a forcing function pushing SMBs towards “Do It For Me” delivery models.
- We believe that building a reputable online brand that can deliver end-to-end services of high quality will become far more attractive to modern entrepreneurs than having to sift through a large number of independent service providers whose skills vary greatly.
- The automated processing of financial data will become increasingly more reliable and will tend to commoditize. We believe that to develop an unfair advantage, automation by itself will not suffice. Rather, SMB vendors will need to insert themselves as trusted partners capable of providing relevant advice to small business operators. This is how winners will create moats and extract premium pricing for their services – they will not simply compete on price.
Overall, we feel that the next generation of AI-enabled SMB vendors will create as much value (if not more) than enterprise SaaS did over the last two decades. It is the timing of those waves combined with the incredible team at Bench which makes us excited to partner with them in their journey towards building a flagship technology company.