Like many fintech startups, bench accounting had the ambition to rock the boring but important financial corner. In this case, it is bookkeeping for small and medium-sized businesses.
It had gained over 10,000 clients in over a decade and seemed to be doing well along the way. But it wasn’t fast enough to make it the hot fintech that was aiming for when it attracted over $100 million in venture finance. With the final push to improve the business, the bench turned to Tech’s favorite new go-to AI. They fired staff and introduced a new automation programme that includes a bot named Benchgpt.
Everything else has reached its peak, divided by the 2023 troubled tax season in which the company needs to request extensions from many clients, has reached its peak. The following year wasn’t good. When 2024 was over, the bench told clients they couldn’t handle their books. In January this year, the company filed for bankruptcy and hammered investors such as Contour Venture Partners, Bain Capital Ventures and Inavia Capital. The customer was temporarily left at Limbo until the acquirer agreed to buy the assets and revive the business.
“It’s literally just a few days before the end of the year and I don’t know what my book will look like,” said Sam Prester, a former bench client who is the CEO and founder of Mission Brand Consulting in Madison, Wisconsin. said in an interview in December. He had to pay another company to start the book over.
The downfall of the bench is a story of attention for businesses in a hurry to transform their business using AI. This episode concludes the ugly headline of a year of VC’s outstanding former presumed fintech. Now we are learning that there is virtually no room for error when dealing with financial services. As bankruptcy passes through Vancouver’s courts, KSV Restructuring Inc. is a councillor held to oversee the lawsuit, and expects almost all investors to be wiped out. According to court filings, the bench’s most senior creditor, the National Bank of Canada, is expected to acquire just a small portion of what it lends.
One serial getter saw the bench closure as an opportunity. Jesse Tinsley, co-founder and CEO of Employer.com, contacted the bench team on the day the closure announcement and bid on the company’s assets. He promised to win the contract, rehire a bookkeeper and honor all customer contracts by taking a basic approach. “Just looking at simple nuts and bolts, you can run this business well, especially if you don’t have the financial pressure to raise VC or private equity,” says Gary, co-founder and chief strategy officer. Levin said of employee.com. Terms where the agreement is not disclosed are expected to close this quarter, which has pending court approval.
This account on bench challenges is based on interviews with current and former executives, employees and investors of the company who have been asked not to be appointed for internal issues, as well as interviews with documents they provide.
Internal issues
By the second half of 2021, former bench executives say the company had generated $35 million in revenue, up 40% per year. But it was not yet beneficial. That automation effort requires investment, and the SME segment is characterized by a high sales rate known for losing clients from closures. The bench did not demonstrate the characteristics of the venture’s success story. It was not a hyper-growth high margin software business, and not a type of metric that holds the potential of public inventory lists.
Nevertheless, Bench co-founder and former CEO Ian Crosby spoke that year to receive a $200 million-$300 million acquisition offer from business banking startup Brex, and Technology Publications Newcomer reported. He used the offer as an opportunity to advance on a new path. He raised another funding and used his money to make a bigger bet: expanding into banking services. The board agreed, and in June 2021 the bench announced $60 million in mixed equity and debt financing in a round led by Contour Venture Partners, with participation from Altos Ventures, Inavia Capital, Shopify and Bank of Montreal. It was announced.
With fresh cash in the bank, the bench tripled the size of its engineering, product and design teams to build the next iteration of business. According to a former executive, it began burning that cash. According to people familiar with the discussion, several months after the 2021 fundraising round was shut down, board members approached Crosby with concern. Rather than moving away from the core book keeping business by expanding into banking services, board members thought the bench would need to use new funds to focus on achieving profitability. The board argued that this goal should reduce one of the company’s biggest expenses.
According to former executives, in the months following the June funding round, Crosby and board members gradually automate processes, or place big bets on automation, or expand into banking services. We collided with whether or not we are. According to people close to the discussion, on December 1, 2021, Crosby was removed as the company’s CEO. He refused an offer to stay on the board or take another executive position and left the company, they said.
In August 2022, Bench Chief Financial Officer Jean-Philippe Durrios was promoted to CEO. By this point, most of the $30 million in Series C stock funds had been spent, according to people familiar with the company’s operations. Durrios did not respond to requests for comment.
AI Rollout
Durrios’ tenure was defined by his focus on profitability, according to former executives. In his first two years under his leadership, the bench’s 613 staff members received multiple rounds of layoffs. By the time he filed for bankruptcy, there were 413 employees on the bench.
In mid-2023, Dorios implemented a strategy designed to increase the efficiency of bookkeepers by splitting the efficiency of bookkeepers into specialized teams and arming them with AI tools. In the new model, associates took over client communications despite not running most of their bookkeeping services themselves. According to former employees, the number of people they completely handled, swelled with about 70 people, has now reached about 200 people they asked questions. Approximately 40 bookkeepers were fired shortly after the reorganization, a former executive said they put a strain on implementation.
The bench hired an accountant from outsourcing company HJS and promised that the upcoming AI product launch would do everything smoothly. One of these new programs is called Benchgpt, an internal tool for employees to ask questions about their clients’ needs. The tool has proven unreliable, according to a former employee. Bench launched a similar chatbot tool for clients designed to help with cost classification, but it was often inaccurate and had to manually correct that entry, and 2 People’s employees said. The HJS accountant did not respond to requests for comment.
Like most AI product launches, the tools have gradually improved, but according to former employees, they have not lived in time to support the modest bookkeeping team for the 2023 tax season. During that year, the bench failed to meet filing deadlines and requested an extension for a significant portion of its client, the same people said. The company had to rehire a bookkeeper, adding additional financial pressure.
Meanwhile, those familiar with the company’s business say the benches often face cash shortages and rely on a bridge between venture capital and debt to stay open. During Dulios’ tenure, the bench repaid debts from the Bank of Montreal and gained an increase in credit lines from the National Bank of Canada, the same people said.
Last fall, Dorios told the board that the business needed money again. They responded with additional funds and sent Adam Schlesinger from Inavia Capital to assess the state of the business. In October, Schlesinger was appointed to replace Dulios as CEO, and the board looked for a buyer for the bench. However, people who were there and were asked not to discuss confidential information said the bench had violated terms that violated its credit line.
On December 27th, the bench was closed on its website, closed for business and recommended that it rely on its competitor, Kick. In January, Bench Accounting Inc. and 10sheet Services Inc., which operate as Consolidated Business, filed for bankruptcy with a cumulative deficit of $135 million, according to a KSV report. The National Bank of Canada did not respond to a request for comment. Bank of Montreal declined to comment.
– Support from Jonathan Randles.
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