An Open Letter From FreshBooks Founder Mike McDerment
July 23, 2014
A big step today. FreshBooks, the business I co-founded 10 years ago in my parents’ basement, has secured its first round of institutional funding—$30M USD from some of the world’s best investors. This capital will give us the ability to do more faster, and that’s very exciting for you—FreshBooks customers.
As a founder, raising growth capital is a personal choice, and I have wrestled with it for years. Will outsiders force us to compromise on our dedication to quality and our excellence in customer service? Will the influence of investors threaten our culture, a culture which last year earned FreshBooks the distinction of the top employer in Toronto—now the fourth-largest city in North America after Mexico City, LA and New York?
But that’s not the only struggle I’ve had—growing from founder to CEO has been a challenge. For years the role of CEO was incomprehensible to me, yet it was my role. Since then I’ve come to understand it’s about three things: setting the vision, building a world class team, and ensuring your bank account aligns with your ambition.
There are 60 million small businesses in the English speaking world and only about 17% of them use accounting software. The rest mostly use Word and Excel. Consider the implications. We know using FreshBooks helps owners save an average of 16 hours a month. Using back of the envelope math, Word and Excel use is costing the World almost 10 billion hours annually. That’s human potential squandered, and these are not your average hours—these are the hours of our most productive and dedicated members of society—small business owners.
Going forward, FreshBooks’ success should be measured by the increase in adoption of accounting software— growing adoption from 17% to 25% and then to 50% and beyond. Good news though; we are watching a whole new generation of entrepreneurs emerge. People who have grown up with the Internet, the kind of people who will never use Word and Excel to run their businesses because they know someone’s built something better and it’s waiting for them in the cloud or their mobile app store.
Now, 60 million businesses is a lot to serve. We don’t believe you can be the best at anything if you try to serve everyone, so FreshBooks is designed exclusively for client service business owners—people who send invoices and get paid for their time and expertise. No retail. No manufacturing. No restaurants. We believe this difference matters, and we are the only accounting software company in the world solely focused on serving this market.
Back at headquarters, we’ve been busy building out our team. Over the last 18 months we’ve created a world-class executive team—recruiting top talent from Toronto, Ottawa and Silicon Valley. This team now leads over 150 FreshBookers determined to build a global leader headquartered in our hometown, Toronto. Having these people on-board has transformed FreshBooks, and on a personal note, changed my work-life balance, setting myself and our whole company up for our next phase of growth.
Which brings us to capital—the third part of the CEO role. When we started in the basement, I built a tool for myself. It suited my purposes and my clients liked it. Since then FreshBooks’ vision and ambitions have grown. Realizing our vision and feeding our ambition requires capital. So—we’ve raised it.
The path to raising this capital began years ago. Over the years, I have spoken with hundreds of investors with no immediate intent to take on capital, but to prepare for the moment when FreshBooks might. That effort has proved fruitful and I am proud to be adding new members to the FreshBooks team—three of the most successful funds in the business, with track records of aligning with founders to grow great, long-lasting companies. We welcome our new partners: Oak Investment Partners, Atlas Venture, and Georgian Partners.
Bank account topped up? Check.
We raised this capital so we can continue delivering the best product for you.
We raised this capital to further one of the world’s greatest customer service cultures—a culture that won 6 Stevie Awards last year and in doing so is recognized as the best in the world by the best in the world.
We raised this capital because we believe that client service small business owners deserve cloud-based accounting software designed just for them—not designed for everyone.
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.