Accounting practice management technology start-up Practice Ignition has been backed by Australian venture capital funds Microequities Venture Capital Fund, Right Click Capital and Black Sheep Capital to the tune of $5 million.
The cloud-based business was co-founded by former accountant Guy Pearson and user experience designer Dane Thomas, and provides small accounting firms with software to manage their client relationships, workflow and payments.
The VC funds join an already-strong stable of investors that has previously backed the young firm, including MYOB co-founder Craig Winkler and TechnologyOne founder Adrian Di Marco.
Mr Pearson said the capital raised would go towards building further data analytics features into the platform, and accelerating overseas growth.
“We built the platform as the source of truth for client relationships, now it’s about what to do with the data, so we’re building out the analytics and intelligence platform to help firms discover why certain things are happening,” he said.
“Then we’ll double down on marketing because we haven’t had much of a marketing or sales function to date. We’ve also been tossing around the idea of distinct business units in each region.”
The company was created from a plan on the back of a beer mat in 2011 and Mr Pearson presented its minimum viable product at Xerocon in 2012, before Mr Thomas joined the business in February 2013.
Growth
Mr Pearson created the business after running his own online accounting firm, Interactive Accounting, and discovering that none of the software providers were focusing adequately on the accountant-to-client relationship.
Now Practice Ignition has more than 1000 accounting practices signed up, with 400 in Australia and the rest of the firms predominantly in the US, Britain and Canada.
Mr Pearson said the business had a global focus from day one, and he believed the highly competitive accounting software market would eventually be won by a global player like Xero or Intuit, rather than a firm that focused solely on local markets. MYOB has focused on the local market rather than looking to expand internationally.
“I’ve seen other companies take a ‘land and expand’ approach where they build the product in a local market and then expand and drop millions of dollars on it. I’ve seen accounting vendors waste a lot of money doing that,” he said
“We wanted to ensure we wouldn’t face any problems in overseas markets or realise too late that Australia was just an island with 24 million people; I’m not trying to hate on anyone but you need global online infrastructure from a ledger point of view to win the global race. It comes down to the total addressable market.”
Microequities Venture Fund co-founder Howard Leibman said it was the global reach of Practice Ignition’s product that appealed to the firm.
“The product addresses a truly global market opportunity and, with a customer base already spanning some 20 countries, the team has clearly demonstrated its ability to scale activities well beyond Australia,” he said.
Right Click Capital founder Benjamin Chong said the fund had been monitoring the progress of Practice Ignition and, like Mr Leibman, believed it was its international reach that made it stand out as an investment opportunity.
Future
Mr Pearson is also conscious of giving the company’s investors a chance to make a profitable exit. Mr Pearson would have liked to bootstrap the company, saying he’d have liked to run it like Atlassian “but I could only code a bank statement”.
Although the start-up has focused on small firms so far, Mr Pearson believes the larger accounting firms will migrate from their old internal practice management tools in the coming years.
“If you’re in an older-style accounting firm, the chances are the practice management software is still on the desktop,” he said.
“Smart firms will realise they need to start taking the same advice as they’ve been giving to their clients these past few years.”
Read the original article on the Financial Review
