Fresh off a $130 million raise in August, the Canadian SaaS accounting software player FreshBooks has deployed some of that capital to buy its way a little closer to the global reach the company craves.
When it announced the big raise this summer, FreshBooks listed sales and marketing, research and development, and strategic acquisitions as its priorities. Now we are seeing the strategic acquisitions piece begin to play out.
FreshBooks has acquired the German accounting software FastBill for an undisclosed amount. CEO René Maudrich founded FastBill in 2011 in Frankfurt, Germany. The company has customers in 16 countries, predominately in Germany, Austria, and Switzerland. We don’t know how many customers or how much revenue FastBill has.
FreshBooks crossed into unicorn territory (+$1 billion valuation) with its August raise. FreshBooks has always operated in a competitive space. Intuit’s Quickbooks, NetSuite, Xero, Zoho, Sage, and others offer competing solutions. But FreshBooks has carved out a loyal niche among the self-employed.
When we spoke with FreshBooks SVP Corp. Dev. Matthew Baker earlier today, he told us the acquisition was motivated by FreshBooks’ desire to deploy its capital to increase its global footprint. Something the company plans to do via a combination of acquisition and organic growth.
“Global reach is a big imperative,” Baker told us. “Both in terms of customers and employees.”
With this acquisition, Toronto-based Freshbooks now has a presence in six countries (USA, Canada, Mexico, Croatia, Netherlands, and Germany). The company now has customers in more than 100 countries. Freshbooks now has 571 employees worldwide.
Maudrich will remain with FreshBooks. He’ll report to FreshBooks’ SVP of markets, Dragana Ljubisavljevic, a former Groupon executive who joined the company in July.
More Deals to Come
The acquisition was largely a way for FreshBooks to fast-track its market entry into Germany. Expect to see FreshBooks leverage its new foundation in Germany into new market entries. Baker tells us to expect a combo of acquisitional and organic growth. While Baker says the right things about the team and tech, this deal seems to clearly be a play for real estate over technology.
“This gets us into Germany faster and better positioned as far as language, sales tax, and advisor network,” Baker told us. “The team and tech are what sealed the deal. They have very similar values. And the technology integrates nicely with our own tech stack.”
Another angle is that FreshBooks saved time and expense by acquiring a company already steeped in the EU regulatory environment.
“We’re now a much better fit for markets with electronic invoicing regulation and/or digital sales tax regulation,” Baker said.
FreshBooks was focused on geographic expansion even before its big August raise. In September 2020, FreshBooks purchases Facturama, a Mexican cloud accounting platform serving 19,000 self-employed professionals in Latin America.
“We have been adding currencies and languages to the FreshBooks platform, both organically and inorganically,” Baker said. “With this acquisition and the one in Mexico last year, we have the foundation to enter more markets that way but will also continue to look at more acquisitions.”
We asked Baker what we should expect from FreshBooks in terms of acquisitions going forward.
“Probably two per year is a good range for our intentions,” he said. “We’d like to do some core platform expansion and add to our capability in addition to the market entries.”