Bench had a crazier holiday break than your startup

Bookended by a sudden shutdown and a rapid acquisition, Vancouver-based FinTech startup Bench Accounting had a chaotic holiday season.

On Fri. Dec. 27, the bookkeeping tech company abruptly ceased operations, leaving hundreds of employees out of work and thousands of small business customers in the lurch with 2025 just around the corner.

Bench, which had raised over $100 million USD in total funding, announced the closure in a brief notice posted to its website, stating its software platform would no longer be accessible, effective immediately. The company did not disclose a reason, but The Information has since reported that it was forced by a bank calling in Bench’s venture debt loan.

Three days after closing its doors, Bench struck a deal to be acquired by US-based Employer.com.

The company’s sudden shutdown spawned a deluge of reactions on social media, including takes from former Bench leaders. The topics ranged from the perils of venture capital (VC) and venture debt to the viability of bookkeeping automation and the risks of ousting founders. Amid the upheaval, competing bookkeeping tech companies also attempted to poach Bench customers who were initially left scrambling for an alternative.

Then, three days after closing its doors, Bench announced that it had struck a last-minute deal to be acquired by San Francisco-based human resources tech startup Employer.com. The financial terms of the transaction, which closed on Jan. 1, were not disclosed by either company. Since then, Employer.com has been working to revive Bench’s platform, rehire some of its employees, and help clients port their data or keep their current service, promising to honour existing commitments in the hopes of ensuring a seamless transition.

“While the challenges Bench recently faced were unexpected, we recognized an extraordinary opportunity to integrate their capabilities into our own suite of solutions,” Employer.com founder and CEO Jesse Tinsley said in a statement. Tinsley has been documenting the acquisition and integration process and his push to win over Bench clients in detail on X.

Bench chief people officer Jennifer Bouyoukos told BetaKit that Bench has already brought back more than half of the 450 employees it laid off on Dec. 27 over the last few days, and is currently evaluating how many it will retain in total. Back in 2021, Bench claimed to have a workforce of more than 650.

BetaKit has reached out to Employer.com for additional comment.

Founded out of New York in 2012, Vancouver-based Bench has touted itself as “the largest bookkeeping service in America for small business.” The company provides bookkeeping automation software and access to in-house bookkeepers on a subscription basis, catering to small business owners.

Speaking on condition of anonymity, a source familiar with Bench’s operations told BetaKit that providing customers with human bookkeeping services while working to build a scalable tech platform proved to be more difficult than expected.

According to the source, Bench was struggling with scalability and burning cash to the point where it became insolvent. The source claimed that this insolvency created challenges, given the company’s debt load, and led to the company’s abrupt shutdown ahead of an expected bankruptcy.

Bench is not the only Canadian accounting tech scaleup that has struggled in recent years. Toronto-based, small and medium-sized business-focused FreshBooks has undergone leadership changes, staff reductions, and office shutdowns in its push to become profitable. According to a recent report from The Globe and Mail, as of last year, FreshBooks had little cash, high debt, and was looking for fresh capital to remain operational.

While Bench’s website indicates the company is “trusted by 35,000+ American small business owners,” Employer.com told TechCrunch last month that Bench has approximately 12,000 customers. Bouyoukos declined to confirm whether this figure is accurate.

Bench had raised over $113 million to date from a group that includes Canadian investors like BMO, Inovia, Shopify, and Teralys Capital, as well as foreign backers like Altos Ventures, Bain Capital Ventures, Contour Venture Partners, Sage, and Silicon Valley Bank.

Bench’s last reported financing was a $60-million Series C round in mid-2021, which came amid a much more favourable VC market. At the time, Bench did not disclose the breakdown of this round in terms of equity versus debt. PitchBook data indicates that this funding consisted of $37 million in equity and $23 million in debt and came at a post-money valuation of $232 million.

Bouyoukos told BetaKit that there was debt in the company’s Series C round but declined to confirm whether PitchBook’s breakdown is accurate, share the name of Bench’s venture debt provider, or disclose whether a bank calling Bench’s venture debt ultimately triggered its Dec. 27 closure.

Bench co-founder and CEO Ian Crosby departed Bench shortly after the company’s Series C financing in early 2022. At the time, Crosby and incoming president and CFO Jean-Philippe Durrios told BetaKit that Crosby stepped down.

But in a Dec. 27 LinkedIn post, Crosby claimed that he was fired by Bench’s board of directors following disagreement over the company’s strategic direction. According to Crosby, after Bench’s Series C financing and decision to turn down what he wrote was “a highly lucrative acquisition offer,” an unnamed member of the company’s board informed him that they had decided to bring in “a new professional CEO to ‘take the company to the next level.’”

“I hope the story of Bench goes on to become a warning for VCs that think they can ‘upgrade’ a company by replacing the founder,” wrote Crosby. “It never works.”

In an X post replying to Crosby, Shopify COO Kaz Nejatian blamed the shutdown on the decision to replace Crosby with Durrios. “Bad investors destroyed a great Canadian company by replacing the founder with so-called professionals,” he wrote. Shopify co-founder and CEO Tobias Lütke echoed Nejatian’s assertion in an X reply of his own, adding that there are “too many such stories in Canada.”

After leaving Bench, Crosby went on to work for Shopify as product director of banking and accounting and head of financial services, before departing to launch another Vancouver-based accounting tech startup, Teal, which was acquired last fall by American business banking firm Mercury.

Durrios became Bench’s CEO in August 2022 before quietly departing the company late last year. Bouyoukos told BetaKit that Durrios was released in November and Adam Schlesinger, executive in residence at Bench backer Inovia, was brought in to conduct a thorough assessment of its business ahead of an expected sale.

Employer.com got in touch with Bench after learning of its shutdown.

“An exhaustive [merger and acquisition] process was started earlier in the year, Employer.com approached me regarding the acquisition after their founder and CEO, Jesse Tinsley, learned of Bench’s shutdown in the news,” Bouyoukos told BetaKit.

As first reported by The Information and since confirmed by BetaKit, Bench had been trying to sell its business in the weeks leading up to its closure, with a final push last weekend by investors from Inovia and Bain.

According to The Information, Bench had struggled to retain customers following its Series C round. Bouyoukos confirmed to BetaKit that the startup closed two bridge financings since its Series C in mid-2021.

Employer.com, which focuses on payroll and onboarding, was launched in November by recruiting services company Recruiter.com as a consolidation of the company’s existing portfolio of brands and technologies. According to its website, Employer.com’s clients include Google, Chipotle, Robinhood, X, and Chime. In a Jan. 1 X post, the CEO claimed the firm is bootstrapped, profitable, and on track to hit $100 million in annual recurring revenue in 2025.

CORRECTION (01/03/25): This story has been updated to clarify a source’s claim to BetaKit that Bench struggled with scalability rather than profitability.

Feature image courtesy Bench Accounting.