FreshBooks, a Toronto-based cloud accounting software company focused on SMBs, announced today that it has secured $ 80.75 million in a Series E funding round and $ 50 million in debt financing.
Existing funder Accomplice led what the company described as “an insider round” that turned FreshBooks unicorn with a valuation of “over $ 1 billion”.
JP Morgan, Gaingels, BMO Technology & Innovation Banking Group and Manulife also participated in the investment together with the platform partner and new financier Barclays. With the new capital injection, FreshBooks has raised a total of more than $ 200 million in funding over its lifetime.
FreshBooks has developed a cloud-based accounting software platform that makes things like invoicing, expenses, payments, payroll, and financial reporting easier for small business owners and self-employed (and their customers). The company, which claims to have served more than 30 million people in over 160 countries, was launched in the first decade of its existence.
As with many startups, FreshBooks was launched to solve a pain point for one of its founders. In 2003, FreshBooks co-founder Mike McDerment ran a small design agency. When billing customers, he found the use of Word and Excel frustrating and felt that they weren’t designed to create professional looking invoices. So he coded his own solution that became the foundation of what FreshBooks is today. The company financed itself up 2014 when McDerment decided to bring in outside investors and raised $ 30 million from Oak Investment Partners, Accomplice and Georgian Partners.
Don Epperson joined FreshBooks in 2019 as Executive Director before moving to the role of CEO this year. McDerment, who previously held the position, remains as the company’s chief executive officer.
FreshBooks has 500 employees in Canada, Croatia, Mexico, the Netherlands, and the United States – and hired over 100 people last year. The company also entered the Latin American market last year after acquiring Mexico-based e-invoicing company Facturama in September 2020 in an effort to expand its audience into Spanish-speaking markets.
FreshBooks plans to use its new capital for sales and marketing, research and development, and other strategic acquisitions.
The company will also use its new funding to invest in markets that are more regulated and to help property owners manage their finances through “simple workflows,” said Epperson.
For example, he said, more and more business owners are working to go digital to meet local tax and billing compliance systems.
“The need for owners to digitally manage their business has accelerated and this has changed the way small business owners work with accountants and bookkeepers,” Epperson told TechCrunch. “The funding is an injection of confidence in our mission to digitally support small businesses.”
When it comes to growth metrics like percentage sales growth year over year, was locked and just said that FreshBooks ““seen significant growth” in new customer numbers since last year, driven in part by a pandemic-induced increase in new small businesses.
The pandemic has also shown that we need to understand how seismic events affect our customers, Epperson said.
“After analyzing FreshBooks’ own proprietary data, we found that women-owned companies in the US take three times longer to recover than male-run companies,” said Epperson. “These statistics laid the foundation for further research into how the pandemic is affecting companies in multiple industries and in Data sharing partnerships with local governments to help policy makers change support for small business owners. “
Jeff Fagnan, Founder and Managing Partner of Accomplice, based in Cambridge, Massachusetts, is clearly optimistic about the potential of FreshBooks and says of his company’s continued investments in the Canadian company over the past seven years:As more and more people choose to be self-employed, the FreshBooks team fundamentally believes in small business growth and the importance of helping those businesses scale. As an insider, we have a better context for how the company is scaling and how the market is growing, so FreshBooks is our biggest investment yet. “
FreshBooks is the latest in a growing number of Toronto unicorns. Late last month, 1Password raised $ 100 million in a Series B funding round that doubled the company’s valuation to $ 2 billion. 1Password became a unicorn for the first time in 2019.