Led by two accounting software veterans, Vancouver-based Teal has announced approximately $11 million CAD ($8 million USD) in seed funding to provide bookkeeping infrastructure to vertical software-as-a-service (SaaS) businesses.
Teal was founded last year by CEO Ian Crosby and design lead Adam Saint, who both previously co-founded another Canadian technology company in the space—Vancouver’s Bench Accounting—and spent some time working with Ottawa-based e-commerce giant Shopify.
“I feel like I left the job half-done with Bench.”
Ian Crosby, Teal
“We know how [small to medium-sized business (SMB)] accounting needs to get solved, and all the little details that you don’t really learn until you’ve done it for 10,000 [SMBs],” Crosby told BetaKit in an interview, alluding to their work at Bench.
With Teal, Crosby and Saint have set out to finish what they started. “I feel like I left the job half-done with Bench,” Crosby said.
When the pair co-founded Bench back in 2011, Crosby said the idea of vertical SaaS business that cater to SMBs in specific industries did not yet exist. “The only thing that you could really do was go direct to small business, and that’s what Bench was built around for 10 years,” he added. “But we weren’t part of their suite.”
“We weren’t actually in there—it was like … we’re capturing the exhaust of this being a pain point for them, versus really being inside and solving it.”
With Teal, they have identified an opportunity to do just that and build what Crosby described as “the Stripe for accounting”—namely, the infrastructure for vertical SaaS companies to build and offer accounting features in their platforms.
Teal’s all-equity, all-primary seed round was led by Torch Capital with support from fellow New York-based firms General Advance and Dash Fund, Silicon Valley’s Basis Set Ventures, and undisclosed executives at large tech firms like Service Titan, Plaid, Brex, Unit, and Gusto.
RELATED: Former Bench CEO Ian Crosby joins Shopify Balance as product director
Crosby declined to share Teal’s valuation or when its seed round closed with BetaKit, but did note, however, that this marks all of the funding that Teal has raised to date. In a LinkedIn post from nine months ago, Crosby noted that Teal completed “a successful fundraise” during its first few months as a company, which appears to indicate this funding was secured in 2023.
“We’re thrilled to be supporting Teal in its mission to revolutionize the accounting space for SMBs,” Torch partner Katie Reiner said in a statement. “There are 30 million-plus SMBs in the US, and at Torch, we invest behind the tools and platforms that help their businesses thrive. There’s a huge, dire need for streamlined and intuitive accounting tools, and Teal’s embedded approach, coupled with [Crosby] and team’s proven track record of building standout financial software, will address these long-standing pain points.”
Saint and Crosby co-founded Bench together. After nearly six years with Bench, Saint left the company in 2016 and spent some time working in various roles, including in user experience advocacy with Shopify and as a product designer for Quora. For his part, Crosby led Bench as CEO for 10 years until his departure in early 2022, six months after the accounting software scaleup closed $73 million in Series C financing.
Crosby went on to join Shopify, first as product director of Shopify’s business banking offering and then as head of financial services, before departing in April 2023 and teaming up with Saint to launch Teal. He said they did this after realizing most vertical SaaS companies did not offer accounting in their product suites.
RELATED: FreshBooks president and CEO depart as company lays off six percent of staff
“I saw what was missing,” said Crosby. “I just had this ‘aha’ moment of, ‘Oh my God, accounting needs to live inside vertical SaaS.’” By helping SMB-focused software companies build accounting products, Teal also hopes to help those clients increase user engagement with their other embedded finance products.
Teal provides out-of-the-box tools to help vertical SaaS companies launch their own accounting platforms in as little as four weeks, including fully functioning app code repositories and native integrations with external data sources.
The goal is to help those businesses offer their SMB end customers the ability to more easily draw insights into things like real-time cash flow, per-product profitability, and access tax filing and support from live bookkeepers.
Teal has already amassed a list of customers that includes Dripos, which caters to coffee shops, Flychain, which serves healthcare providers, and e-commerce-focused DayZero. The startup plans to use this funding to fuel its go-to-market and product development efforts.
“We have a model that’s working,” said Crosby. “We’re now scaling it up. [The] first thing to scale is go-to-market. I’m back-to-back every day with companies that want to talk to us about building on this, so I need salespeople to help me.”
Feature image courtesy Teal.
