Like many great innovations, ScaleFactor was founded as an answer to an ask. Kurt Rathmann was once a long-suffering CFO in search of a way to access the information he needed, when he needed it. Surprisingly, that was a lot harder than it should have been but the solution to that problem became Rathmann’s new raison d’être.
“I began a quest to simplify the complex accounting tasks and automate the tedious manual work. In short order, I became obsessed,” Rathmann explained in an intervew. “Soon, everything else became a distraction to solving this problem… including my job as CFO. Once I realized that I [was] very passionate about this problem and that I knew how to solve it, it only made sense to pursue it full-time.”
Fortunately for those smaller businesses that were enslaved by manual-entry accounting methods, Rathmann’s mission was made manifest with his founding of ScaleFactor in 2013. He started the company at his living room table and the company grew from one to four employees by the end of the year. They aim to always be up-and-running and always be up-to-date so clients never have to wonder what’s happening with their business.
The US-based company operates on a SaaS model that offers their clients three tiers of services – ranging from an entry level package price at approximately $400 and upwards for those companies looking for a more customized solution. ScaleFactor can make accounting miracles happen for those looking for anything from a straightforward book-keeping service, to bill pay and invoicing, tax compliance, payroll, and business insights.
“There’s a lot of them, and they need a lot of help,” Rathmann said about his smaller business clients. “And they don’t traditionally have access to resources that bigger companies do. Ultimately, we want to provide more than just accounting and finance assistance. We want to help our customers with what’s happening tomorrow, or next week.”
ScaleFactor points to their automated accounting functions, secure storage of sensitive documents, and their seamless integration with business applications like Salesforce, Gusto, Stripe and Paypal. Their software also looks for patterns in transactions using machine learning and custom rules to predict future cash flows and changes in spending.
They are also proud of features like their compliance calendar that comes as part of their tax and compliance suite. Backed by a full staff of tax support experts to ensure the calendar is customized to a client’s particular needs, it helps small businesses stay on top of all their Uncle Sam-related obligations and avoid unnecessary fines.
“In time, we want to be known as the news feed for a business,” Rathmann added. “We alert our customers to what needs attention and make proactive suggestions with their bottom line in mind.”
Despite its Texas-base, the company hasn’t escaped the notice of top Silicon Valley investors either – with the likes of Bessemer Venture Partners, Canaan Partners and Broadhaven Ventures making a bet on ScaleFactor’s success. In total, the SaaS firm has raised a $100 million with the most recent influx of capital coming from a $60 million funding round led by none other than Coatue Management – well known for funding the likes of Uber, Lending Club and Reddit.
ScaleFactor is expanding fast as evidenced by a 700 percent surge in annual recurring revenue – a measure used by software companies to gauge growth in subscription income. They plan on using the fresh influx of funds to incorporate more features into their existing offerings and entering completely new financial spaces. The company is reportedly looking at extending into the lending market as part of their vision to become a financial one-stop-shop for small to medium-sized businesses.