The European economy is on shaky ground, but there is an upside for start-ups: firms that create tools to help businesses manage their funds in a more stable and predictable way are seeing growth.
In its latest project, AccountsIQ, a Dublin-based accounting technology company, has raised €60 million (roughly $65 million) to create the “financial function of the future” for medium-sized businesses: cloud-based, automated services powered by artificial intelligence to help accounting departments work faster and smarter.
KontaIQ, which has been in business (primarily bootstrap) for almost 20 years, was founded by accountants who saw an opportunity to build the tools they wanted. As you’d expect provided that pedigree, they have been fiscally prudent when it comes to growth.
By the time of this fundraising, with just €12.7 million in external funding, AccountsIQ had gained roughly 1,000 customers, spanning 10,000 “entities” (multiple operations for one company) and 20,000 users. The company’s CAGR has remained regular at 30% annually for several years, COO Darren Cran said in an interview.
The company offers a range of digital accounting services (including receivables and payables, banking, business analytics, forecasting and budgeting), digital tax services and reporting. It also integrates with a big selection of third party services and has an API to interoperate with other platforms, all delivered via API SaaS subscription starting at around $250 per user monthly.
The platform is hosted on Azure, and Cran said it uses Microsoft artificial intelligence tools and builds customizations itself to offer next-generation services that may include greater process automation and AI-driven features to speed up users’ workflows.
“We are now ready to take AccountsIQ products and services to the next level,” Tony Connolly, founder and CEO of AccountsIQ, said in a statement. “This investment represents an excellent turning point for our offering as it allows us to leverage AI tools in practical, easy-to-implement services for our user base; to make the roles of finance teams more flexible, more valuable, less repetitive and actually more interesting.”
The funding is a significant sum not only because it is almost five times larger than ever raised by AccountsIQ before, but also because startups, in general, proceed to struggle to raise money as they did a few years ago, especially in the domestic market of this startup.
AND latest report The Irish Venture Capital Association found that startup funding in Ireland was down 48% in the first quarter of this yr compared to the previous yr.
However, the constant theme of the bear market has all the time been the power of solutions that simply help firms do their jobs higher and more efficiently. Thus, the mundane accounting startup continues to attract attention.
“Seeing the potential to accelerate AccountsIQ product development with additional capital and expertise, we are excited to work with them to scale AIQ to the next level,” Martin Wygas, founding partner of Axiom Equity, said in a statement.
For comparison, Pennylane, one other accounting startup focusing on the SMB market, raised $40 million a few months ago at a valuation of over $1 billion. It currently has roughly 120,000 users. AccountsIQ and its lead investor in this round, Axiom Equity, are not disclosing their valuation.
That’s one potential competitor, although AccountsIQ says Pennylane and similar firms are looking to replace some incumbents selling smaller firms like Xero, QuickBooks and Sage. Cran said that AccountsIQ is positioning itself as a platform that firms will migrate to as they scale their operations.
“We are really offering an olive branch to companies,” he said. “When they grow and a CFO or CFO comes in, they usually realize they need to scale and that to do that they need to use a new system.”
AccountsIQ competitors include: Sage Intacct, NetSuite and Acumatica, he said.