FreshBooks, a Toronto-based cloud accounting software company focused on SMBs, today announced that it has secured $80.75 million in a Series E round of funding, as well as $50 million in debt financing.
Existing backer Accomplice led the equity financing, which the company described as an “inside round” that propelled FreshBooks to unicorn status with a valuation of “over $1 billion.”
JPMorgan, Gingells, BMO Technology & Innovation Banking Group and Manulife also participated in the equity investment along with platform partner and new backer Barclays. With the new capital injection, FreshBooks has now raised over $200 million in total funding over its lifetime.
fresh books A cloud-based accounting software platform designed to make things like invoicing, expenses, payments, payroll and financial reporting easier for small business owners and self-employed people (and their customers). The company, which it says has served more than 30 million people in more than 160 countries, was bootstrapped for the first decade of its life.
As is the case with many startups, FreshBooks was started to solve a pain point for one of its founders. In 2003, Mike McDermant, co-founder of FreshBooks, was running a small design agency. When it comes to billing clients, they find it frustrating to use Word and Excel and felt they weren’t made for creating professional-looking invoices. So he coded his own solution which now became the foundation of FreshBooks. The company was self-funded until 2014, when McDermant decided to bring in outside investors and raised $30 million from Oak Investment Partners, Eclipse and Georgian Partners.
In 2019, Don Epperson joined FreshBooks as Executive Director before transitioning to the role of CEO this year. McDermant, who previously held the position, remains as the company’s executive chairman.
FreshBooks has 500 employees in Canada, Croatia, Mexico, the Netherlands and the United States – having hired more than 100 people in the past year. Also in the last year, the company entered the LatAm market After acquiring Mexico-based e-invoicing company Facturama in September 2020 In an effort to expand its audience in Spanish-speaking markets.
FreshBooks plans to use its new capital for sales and marketing, research and development, and additional strategic acquisitions.
According to Epperson, the company will also use its new funding to invest in markets that are becoming more regulated and helping owners manage their finances through a “simplified workflow.”
For example, he said, more business owners are working to become digitally enabled to complete local tax and invoicing compliance systems.
“The need for owners to manage their business digitally has intensified, and it has changed how small business owners work with bookkeepers and accountants,” Epperson told ClearTips. “The funding comes as an injection of confidence into our mission to enable small businesses digitally.”
When it comes to growth metrics like year-over-year revenue percentage growth, performance was tight-lipped, only saying that in FreshBooks”The number of new customers has seen a significant increase since last year, partly due to the pandemic-induced increase in new small businesses.
Epperson said the pandemic also highlighted the need for us to understand how seismic events affect our customers.
“After analyzing FreshBooks’ own proprietary data, we found that women-owned businesses were taking three times as long as men-owned businesses in the US,” Epperson said. “This stat laid the foundation for further research into how the pandemic was affecting and penetrating businesses across multiple industries” Data-sharing partnership with local governments To help policymakers drive change in the support available to small business owners.”
Jeff Fagnan, Cambridge founder and managing partner of Massachusetts-based Accomplice, is clearly bullish on FreshBooks’ potential, saying of his firm’s continued investment in the Canadian company over the past seven years: “With more people choosing to be self-employed, the FreshBooks team fundamentally believes in the growth of small businesses, and the importance of helping these businesses scale up. As insiders, we have a better context of how the company is growing and how the market is growing, and this is why FreshBooks is our biggest investment to date.
FreshBooks is the latest in a growing number of Toronto-based unicorns. Late last month, 1Password raised $100 million in a Series B round of funding, doubling the company’s valuation to $2 billion. 1Password first became a unicorn in 2019.