Wave Accounting Raises $12M, Adding 1,000 SMBs Every Day

Toronto-based online accounting startup Wave Accounting today announced that it has rasied a $12 million Series B funding round, led by Social+Capital Partnership, and including additional funding from existing investors Charles River Ventures and OMERS Ventures. The round will help jumpstart Wave’s growth, and provide the means for the startup to hire additional staff and continue to develop new products.

“We are growing super fast, adding new bodies to help execute on the vision that we’ve got for Wave Payroll, Wave Accounting and our subsequent launches,” Wave VP of Community, Content and Communications Rob Maurin told BetaKit in an interview. “We landed the partners that we got, and the money we’re getting because of the traction that we’ve been able to show so far, with a quarter of a million small businesses signed up, we’re adding about 1,000 new small businesses every day.”

Maurin also noted that a big part of Wave’s success has been its international appeal. The startup has seen adoption in virtually every country in the world, with the exception of just a handful of remote or politically volatile locations like North Korea, Iran and some central African nations. It’s that kind of success that’s been harder for competitors like UK-based FreeAgent to replicate, though that company recently acquired 60mo as a precursor to moving more aggressively into the North American market.

While he acknowledges that the space is a busy one, Maurin says that Wave isn’t afraid of a little competition. “There are a number of people in the market who are at different stages of their evolution,” he said. “But right now we’re confident that we’ve got the plans in place and the products in place, everything including our feature set right down to our pricing model, that make wave a compelling tool for small businesses to use.”

The pricing model for Wave Accounting is definitely a big advantage, since Wave offers its services completely free to small businesses. There’s no tiered levels, either, ranging from basic to more advanced offerings, as is common for cloud-based software providers. Instead, Wave partners with bigger businesses and brands to offer deals and targeted advertising to its users, and the fees it charges those partners pays for the accounting services it provides small business users. Maurin said that while a few clients still seem somewhat skeptical and ask if they can pay for anything, the vast majority of their customers are coming at the search for software from a consumer perspective, where freely available online tools like Google Apps have them expecting to find free solutions anyways.

After finding success with its free, ad-supported web-based accounting software model, Wave Accounting recently introduced a new offering to help small businesses manage payroll. Wave Payroll, which went live in February in Canada, isn’t free, but is low-cost at just $3 per user per payroll cycle. Maurin told BetaKit in an interview that the company is committed to keeping Wave Accounting free, but will evaluate new pricing models on an individual basis for its upcoming product releases.

While Maurin wouldn’t reveal any of the company’s specific upcoming product launch plans, he did say that the company has been paying close attention to requests from the community, and recently made improvements to its feedback tool to improve its ability to gather info from users, and spoke generally about where the company is headed. “Our goal is to tackle all of those tasks that sit outside of the core of a small business owner’s knowledge base and comfort zone, and find ways to simplify them, automate them and take them out of the headache pile,” he said.

Wave is off to a great start, and its total funding of $18.58 million since its launch in 2010 reflects the confidence investors have in its progress. If it can continue to identify business-side pain points for small businesses and eliminate them with cheap and easy solutions, it should only continue to gain traction.

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