- Startup Obituary
- Posts
- Startup Obituary: Bench
The Fall and Revival of Bench Accounting
Bench Accounting, a Canada-based SaaS startup, experienced a turbulent period in late 2024, culminating in its sudden shutdown and subsequent acquisition. As one of the most prominent accounting platforms for small and medium-sized businesses, Bench’s collapse sent shockwaves through the startup and fintech communities.
The Sudden Shutdown
On December 27, 2024, Bench abruptly ceased operations, leaving over 35,000 U.S. customers without access to their accounting and tax documents. The shutdown was attributed to various factors including the replacement of the founding CEO with a professional CEO in 2021, which some believe led to the company's downfall. This was followed by a lack of profitability despite significant venture capital investment.
A notice on the company’s now-defunct website informed users that the platform would no longer be accessible. The shutdown displaced over 600 employees and disrupted critical financial operations for small businesses, especially during the crucial tax season.
Company Background
Founded in 2012 as 10sheet Inc., later rebranded to Bench in 2013 after relocating to Vancouver, Bench gained attention for its innovative bookkeeping platform that combined proprietary software with in-house bookkeepers. Its ability to simplify accounting attracted significant venture capital funding:
Total funding raised: Over $113 million.
Notable investors: Shopify, Bain Capital Ventures, Altos Ventures, Contour Venture Partners.
Last funding round: $60 million Series C in 2021.
Despite its promising start, the company faced mounting challenges that ultimately led to its collapse.
Why Did Bench Fail?
While the exact reasons for the shutdown were not immediately disclosed, several factors contributed to Bench’s downfall:
1. Financial Struggles
Bench struggled to sustain profitability as it scaled operations, despite significant funding. The company’s heavy reliance on venture capital left it vulnerable to cash flow issues.
2. Leadership Instability
Co-founder and CEO Ian Crosby left the company in 2021 following disagreements with the board, leaving a leadership gap at a critical juncture.
3. Scalability Challenges
Bench’s hybrid service model, combining software with human bookkeepers, struggled to meet the needs of growing businesses, making scalability difficult.
4. Customer Dissatisfaction
Many users expressed frustration with limited human interaction and inconsistent support quality, which eroded customer trust over time.
Impact on Customers
The abrupt shutdown created significant challenges for Bench’s small business clients:
Loss of Access: Customers were given until March 7, 2025, to download their financial data.
Disrupted Operations: Businesses faced potential compliance issues, missed deadlines, and operational disruptions due to lost access to accounting records.
Timing: The closure occurred just before year-end and tax season, leaving many businesses scrambling to find alternatives.
A Surprise Acquisition
Just three days after the shutdown, Bench was acquired by Employer.com, a San Francisco-based HR tech company, on December 30, 2024.
Key Points of the Acquisition
Employer.com acquired Bench for an undisclosed sum.
The acquisition aimed to revive Bench’s platform and provide continuity for its customers.
Existing users were given the option to port their data to the new platform or continue using the service under Employer.com’s management.
Takeaways
The Bench saga sparked widespread discussion in the fintech and startup sectors:
1. Startup Vulnerabilities
Bench’s collapse highlighted the risks of relying on venture-backed companies for critical business functions. Customers and investors alike questioned the sustainability of its business model.
2. Competitor Responses
Rival accounting platforms, such as QuickBooks and FreshBooks, moved swiftly to offer migration tools and discounts to attract displaced Bench customers.
3. Lessons for Entrepreneurs
The incident underscored the importance of balancing scalability with customer satisfaction and maintaining operational resilience.
Bench Scorecard
Dimension | Score | Reasoning |
|---|---|---|
Product-Market Fit | 3/5 | Bench’s hybrid bookkeeping solution initially solved a major pain point for small businesses. However, scaling challenges and inconsistent support hindered long-term fit. |
USP | 4/5 | Combining software with human bookkeepers was innovative and differentiated Bench from competitors. However, competitors quickly adapted or improved their offerings. |
Timing | 3/5 | Launched when SaaS platforms were gaining traction, but its abrupt shutdown during tax season alienated customers and tarnished trust. |
Founder Fit | 3/5 | Ian Crosby’s vision and leadership were instrumental early on, but his departure in 2021 left a leadership vacuum at a critical time. |
Team (Execution) | 2/5 | Execution faltered in scalability, customer service consistency, and financial sustainability, leading to operational and customer trust issues. |
Conclusion
The rise and fall of Bench Accounting illustrate the volatile nature of the startup ecosystem. While its acquisition by Employer.com provided a lifeline for customers and employees, the episode raised serious questions about the scalability and sustainability of service-based tech startups. For small businesses, the Bench saga serves as a cautionary tale about the risks of dependency on venture-backed platforms for critical operations.
The coming months will determine whether Employer.com can successfully rebuild Bench’s reputation and restore trust among its user base.
I hope Bench’s story highlights the risks of big companies copying your product/service and scaling for cheap. Customer service could be an anetdote for that but Bench didnt have that going for them.
Cheers,
Ram
👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.
Reply