ScaleFactor, the accounting and finance platform for small business, today announced it is suspending a majority of its operations.
Due to headwinds created by the current economic climate, ScaleFactor is laying off half of its workforce today and retaining a portion of its team to help its current customers transition to new service providers.
ScaleFactor raised a total of $100 million, including a $60 million Series C round led by Coatue. Other investors include Bessemer Venture Partners, Canaan, Broadhaven Ventures, Firebrand Ventures, Vulcan, Stripes Group, NextPlay Capital, Citi Ventures and Flyover Capital. As a part of the operational changes, ScaleFactor will be returning a portion of this capital back to its investors. The company will be providing all employees with a minimum of 12 weeks severance pay and will cover healthcare through the end of 2020.
ScaleFactor was originally founded in 2014 as a cloud accounting firm for small businesses. It grew quickly in its first three years by bringing high-powered financial and accounting advisory to SMBs at an efficient price point.
“Our original mission since Day One was to make small businesses more likely to succeed,” said ScaleFactor Founder and CEO Kurt Rathmann. “We saw that large companies were disproportionately advantaged when it came to tools and data, and we set out to solve this massive problem. Our goal was to level the playing field by making back office software that was both affordable and insightful for small business owners. I believe we were on a path to unlocking real disruption in the accounting industry, however, our delivery timeframe just wasn’t a match for the current economic climate.”
The company’s first product, launched in late 2017, was a bookkeeping orchestration software that rides on top of QuickBooks and Xero to make managing books less time-consuming for the business owner. Additional platform enhancements such as integrated bill pay, payroll processing and expense management were added over time to provide business owners a one-stop-shop for managing their financials.
In February 2020, ScaleFactor announced that it would be accelerating its plans to realize a marketplace offering, redoubling its focus on its core software business. Despite early signals that this was a viable move, significant COVID-driven disruptions to the small business landscape in the intervening four months have delayed that evolution and put mounting pressure on the company’s cost structure.
“I want to offer a heartfelt ‘thank you’ for every ScaleFactor employee and their respective contributions over the years,” said Rathmann. “This is a significant setback, but not the end of our journey. While we may not be moving forward with ScaleFactor in its current form, our drive to revolutionize small business accounting will continue well into the future.”
ScaleFactor is on a mission to remove the barriers to financial clarity that every business owner faces. Using software to speed up everyday tasks and a network of financial experts to address complex matters, we’ve set out to provide business owners with what they need to run their back offices with confidence, now and at every stage of business growth.