Toronto’s Freshbooks today announced it has raised (US) $30-million in its first institutional round. The financing was led by Oak Investment Partners and included Atlas Venture and Georgian Partners. The company says it will use the money to accelerate its growth.
CEO Mike McDerment commented on the deal.
“Small business owners are grossly under-served when it comes to accounting software. They don’t have enough choice, and vendors treat them as if one size fits all,” he said. “The result is they are forced to use tools that are complex — or worse, use Word and Excel to run their businesses. Neither of these options helps make running a business easy and efficient. That’s where FreshBooks comes in. We’re the only company exclusively focused on the needs of service-based businesses, ironically, the largest segment of the small business market.”
Ann Lamont, Managing Partner at Oak Investment Partners explained why the fund invested in Freshbooks.
“FreshBooks is growing the cloud accounting software market by delivering a solution that is designed for the millions of small business owners that want to run their businesses without having to learn accounting,” she said. “Given our focus on high-growth financial services technology, partnering with FreshBooks is a natural fit. We look forward to helping FreshBooks realize their vision of building the market-leading accounting solution built exclusively for small service-based business owners.”
Founded in 2003 by Mike McDerment and Joe Sawada, Toronto-based Freshbooks has risen from humble origins in McDerment’s parents basement to become the leader cloud-based invoicing for small businesses. The company’s 122 employees now service customers in 120 countries. Today’s news represents something of a reversal for McDerment, who was famously averse to taking outside funding, which had been knocking on his door with increasing regularity. Late in 2012, he told Bloomberg’s Ari Levy he wasn’t interested in any investor with a short-term window.
“I don’t want to hear anything about you needing your funds back until year No. 9,” he said. “At which point I will call you and ask you if you still want it back in the next year.”
Palo Alto-based Oak Investment Partners boasts more than $8.4-billion in committed capital and has made recent investments into mobile security company Good Technology and online travel site Hipmunk. Closer to home, Toronto’s Georgian Partners has invested in Canadian privcos such as Vision Critical, Shopify, and Top Hat.