Outright.com, an online bookkeeping service aimed at self-employed small businesses, has snagged $2 million in seed funding.
The financing was led by two venture capital firms, First Round Capital and Shasta Ventures, with participation from Jeff Clavier of Softech VC and several angel investors. The company, formerly known as GoBootstrap.com, has been working in “stealth mode” prior to the funding announcement, but meanwhile has been signing up a variety of small business customers who have been trying out the system.
“We’re targeting millions of small businesses that are too small even for QuickBooks,” said Outright.com co-founder and CEO Kevin Reeth, who spent nine years working for Intuit. “When you look at the landscape of small businesses, there are 20 million of 27 million that have no employees, just one person filling out a Schedule C.” The other co-founder, Ben Curren, also worked for Intuit in its QuickBooks unit.
Reeth (pictured) contends that many small business accounting packages are too complex for many self-employed business people to use. “Their businesses are so small, they don’t even describe themselves as business owners,” he said. “They say, ‘I’m self-employed, I work for myself,” but they have tracking requirements like larger companies.”
The Web-based system allows users to keep track of business income, invoices and payments, and see a breakdown of income and expenses by category. Users receive reminders of quarterly tax deadlines, and contractors and freelancers can stay on top of their 1099 forms. The system calculates quarterly tax estimates, including self-employment taxes, and allows users to export the information to a spreadsheet. The software can also generate a Schedule C in a PDF file.
So far, Outright.com has attracted a variety of users, including Web developers, writers, professional services firms, part-time bloggers, an 18-wheel-truck driver, a blueberry farmer and two dog kennel owners.
Given the state of the economy, the process of getting funding was relatively painless. Reeth spent about three months and approached between eight to ten VC firms before the financing came through. “From what I’ve been hearing from other people, we’ve fared significantly better than most,” he said. As part of the financing, First Round Capital partner Rob Hayes has joined the Outright.com board.
Reeth plans to use the funding to augment the staff and improve the product. He also hopes the service will be used by accountants who can work with clients online.
“If the business owner doesn’t know how to classify a business transaction, they can classify it as not sure, and accountants and bookkeepers can come in and classify the transaction,” said Reeth. “It allows accountants and bookkeepers to be more productive. At the end of the year it can be less stressful and time consuming, and free them up to take on more client work.”
