The European economy is in a precarious position, but there's a silver lining for enterprise startups: Companies building tools to help companies run their finances in a more stable and predictable way are seeing growth.
In the latest development, Dublin-founded accounting technology company AccountsIQ has raised €60 million (about $65 million) to build the “treasury function of the future” for mid-sized businesses: a cloud-based, AI-powered automation service that will help accounting departments work faster and more intelligently.
AccountsIQ was founded by accountants who had been in business (mostly bootstrapped) for almost 20 years and saw an opportunity to build the tool they wanted, and as you would expect with that background, the company was financially cautious when it came to growth.
Prior to this round, with just €12.7 million in outside funding, AccountsIQ had acquired about 1,000 customers, covering 10,000 “entities” (multiple operations within a single company) and 20,000 users. The company's CAGR has been steady at 30% annual growth for the past few years, COO Darren Clunn said in an interview.
The company offers a range of digital accounting services (including accounts receivable and payable services, banking, business intelligence, forecasting and budgeting), digital tax services, and reporting, as well as integrations with a range of third-party services and APIs for working with other platforms, all delivered through SaaS subscriptions starting at around $250 per user per month.
The platform is hosted on Azure, and Cran said it will leverage Microsoft's AI tools and build customizations in-house to deliver next-generation services that will include more robotic process automation and AI-based capabilities to speed up work for users.
“We are now ready to take AccountsIQ's products and services to the next level,” AccountsIQ founder and CEO Tony Connolly said in a statement. “This investment marks the perfect inflection point for our offering, allowing us to leverage AI tools to deliver a service that is practical and easy to adopt for our user base, making the role of finance teams more flexible and valuable, less repetitive and more interesting.”
The funding is notable not only because it's nearly five times what AccountsIQ has raised to date, but also because startups as a whole, and especially in the startup's home market, still struggle to raise capital in the same way they did a few years ago.
A recent report from the Irish Venture Capital Association found that funding to Irish startups in the first quarter of this year was down 48% year-on-year.
But a typical motif of bear markets is the staying power of solutions that simply help businesses do their jobs better and more efficiently, which is why run-of-the-mill accounting startups continue to garner attention.
“We recognize the potential for additional capital and expertise to accelerate AccountsIQ's product development and are excited to partner with the company to scale AIQ to the next level,” Martin Waigas, founding partner at Axiom Equity, said in a statement.
By comparison, PennyLane, another accounting startup focused on the small business market, raised $40 million a few months ago at a valuation of more than $1 billion. It currently has about 120,000 users. AccountsIQ and Axiom Equity, the lead investor in the round, did not disclose their valuation.
That's one potential competitor, but AccountsIQ would argue that PennyLane and companies like it are trying to displace some of the incumbents in the small business market, such as Xero, QuickBooks, Sage, etc. In contrast, Cran said AccountsIQ is positioning itself as the platform that companies move to as they scale.
“We really lend a peaceable hand to companies,” he said. “As companies grow and a financial controller or CFO comes on board, they typically realize they need to expand, and to do that they need to put in place new systems.”
Competitors for AccountsIQ include Sage Intacct, Netsuite and Acumatica, he said.