Scalability Wants to Be Every Startup’s Back Office

Toronto-based startup Scalability is launching today, promising a solution that covers the range of business back office requirements and procedures to help startups focus on the things that they should be focused on; namely, building product and managing their customer- and investor-facing business. In his role as a partner at investment firm Flow Ventures and as Managing Director at startup accelerator Year One Labs, co-founder Raymond Luk discovered that taking those kinds of concerns off a startup’s plate can have a huge impact on business.

“I’ve been running companies for almost 20 years, and in my experience there are two kinds of people [in startups],” Luk said, talking about the general appeal of a service that covers issues like preparing and filing taxes, running payroll, preparing invoices and cutting checks, etc. “There are people who’ve never run a business [...] and who underestimate just how messy the back office can get, and there there are people who have done it, and anyone who’s run a company for longer than two years knows that it’s something that’s really complicated.

Luk said in an interview that it can be hard for a lot of startup businesses to see the value in having efficient back of house management in place. “There’s not a lot of upside for a company, like you never win brownie points for having a really clean back office. But if you don’t, you can get audited, you can lose a lot of money that you don’t know about, and you can lose a lot of time,” he said. His tool allows small businesses to outsource admin functions like accounting, payroll, HR and basic office management, to Scalability’s internal team, who uses custom-built software to manage those functions.

Protecting against those kinds of unnecessary expenses without requiring that companies hire in-house staff to manage it is Scalability’s big value proposition, and the reason Luk thinks it will stand about against other SaaS offerings. There are plenty of competitors out there that focus on delivering accounting, payroll and HR services to businesses, like TribeHR, Wave Accounting/Payroll and FreeAgent, but Luk points out that unlike those offerings, Scalability is more of a complete service and less of a DIY tool.

“Our main business is a service, and that’s on purpose, because we feel like founders do not need another tool they need to learn, sign up for and use,” he explained. “At the end of the day, somebody has to take responsibility for all this stuff, and that’s what we offer. We sort of lift the responsibility for admin off the shoulders of management.”

Scalability’s rates reflect how much of that responsibility the company will be taking on; subscriptions start at $699 and go up to $1999 depending on organization size, needs and annual revenue. Companies can also add-on a la carte services that go beyond standard day-to-day business operations at an hourly rate. The fees are reasonable, however, when you consider that Scalability isn’t arming a company’s own admin staff with tools, it’s actually replacing them altogether.

Luk explained that Scalability wants to expand quickly, after this initial launch in Canada. It plans to move to the U.S. within a couple of months, and then globally after that. The reason international presence is a priority is because Luk said that most startups now aim to do business internationally, so it makes sense for their administrative functions to operate on a global stage as well. That kind of ramp-up will obviously require a lot of investment.

Scalability is currently funded by its co-founders, Luk and partner Ange Tancock, along with some seed investment from Flow Ventures. Luk said that the company plans to see how things progress, and then might seek external funds to help fuel its planned expansion. If it can prove to startups that its ability to take away busywork headaches outweigh its costs, it should have room to grow.

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