FreshBooks, Toronto’s online cloud accounting software startup, recently closed an epic $30 million funding round from Oak Investment Partners with participation from Atlas Venture and Georgian Partners. BetaKit reached out to Mike McDerment, CEO and Co-Founder of FreshBooks, to ask about his thoughts on raising funds ten years in and his future plans for the successful global software company out of Toronto.
BetaKit: FreshBooks has pretty much taken over the world of small business since you started it in 2003, way before any of us even used the term ‘cloud software.’ You’ve grown your user base to over 10 million. You’ve been a success story for years now. So why raise funds now, ten years in?
Mike McDerment: The simple answer is ambition. We built up our business, strengthened our executive team and we know we have got a good thing going.From investors’ point of view, that’s not an idea to invest into; it’s a company. It’s got a brand, product, culture. Asking for investment now means de-risking a lot of things. I’m glad we waited with fundraising. If we raised ten years ago, we would’ve been out of business today. The market was just not ready. But now the market is catching on. We’ve been a market leader for years, and we want to continue drive that market growth.
BK: Why grow a company with global ambitions based out of Toronto? Can we handle that as a city whose best brains regularly flee South?
MM: As a founder, I think about contributing back. I’d feel very good about that 20-30 years from today, about being one of the founding companies that grow from Toronto. We know what it takes to build a really big company in Toronto, where we have great schools, large and incredibly talented workforce. Attracting people to a city like this isn’t too hard. I can only imagine what will happen as we grow and scale.
BK: FreshBooks is known for being involved with Toronto’s tech community, whether it’s mesh or hohoto, you’re there. You’re really awesome that way. What makes Toronto the best fit for FreshBooks HQ?
MM: It’s time to realize the ambition of building a global tech company from Toronto. I’m hoping to build a global company that would contribute to the tech ecosystem in Canada overall. It’s the certain kind of DNA that isn’t present as much as I’d like to see in Toronto. But the thing is, there’s pros and cons everywhere you go. There’s no perfect place to build a company. The trick is to make the choice, and have that choice inform our strategy. We know the challenges of growing a global company here in Toronto, so we’ll just keep at it, and keep growing.
BK: Will you be hiring?
MM: Yes, definitely. We’ll be hiring product managers, designers, and engineers to build scrum teams – the kind of people who will build and ship products, who will want to work in a high-tech startup. We will continue our investment into marketing programs. We’re looking into doubling in the next two years, which means increasing our headcount to about 450 by the end of 2016.
BK: Will you be moving FreshBooks HQ some place bigger? Your current location can’t possibly hold that many new people, can it?
MM: We’ve secured some office space in High Park. It’s a great neighbourhood to work and live in, located by one of the largest Toronto parks. We’ve built a great foundation, and we’re up for a great start.
BK: What makes raising $30 million the right move for you, for where you are now?
MM: It’s the right time to take advantage of this huge opportunity in the huge market, and I don’t want to have regrets. By the way, a big part of success of tech company is about getting the word out, so thanks to BetaKit for taking the time to help us tell our story.
McDerment also recently released an open letter announcing the epic $30 million funding round, in which he thanked FreshBooks’ clients, explained the vision and future direction for FreshBooks team. He summed up the big news with the following statement:
“While raising capital has ultimately been a personal journey for me as a CEO, securing this capital is a direct reflection of FreshBookers’ commitment to you and to the products we have built over the last ten years. This capital will help propel us forward, faster. FreshBooks can accomplish more for you with this capital, and we will. Thank you for entrusting us with your business and please call us—FreshBookers love executing extraordinary experiences for you everyday.”
Top photo by Startup CFO