Austin, Texas is well on its way to becoming a hub for small business SaaS activity. We recall when Main Street Hub launched its social media marketing platform in 2010 before GoDaddy scooped it up in January 2018. Main Street Hub had raised $46 million in debt and equity financing from a list of top tier investors.
Austin is also home to Vista Equity Partners, one of the most active private equity firms in the small-business SaaS space. Think Pipedrive, MindBody. Plus a growing number of Localogy ecosystem companies, including SOCi, TigerPistol, and others, are based in Austin.
Now we’re learning more about another Austin-based start-up in the local, small business space called ZenBusiness. The company’s core focus is on helping the small and micro-business get off the ground by helping them file necessary compliance operating papers. The company, founded in 2015, has just closed a $55 million Series B round, according to TechCrunch.
I feel this one. Just this week as I was in the midst of a home refinancing, my loan broker sent me a note saying that my LLC had been suspended. Apparently, I neglected to send the State of California its bi-annual fee. The point is, ZenBusiness is helping us solopreneurs make sure we dot the I’s and cross the T’s.
It’s an interesting starting position for ZenBusiness. It feels like a newer version of LegalZoom (launched in 2001). We often think that the starting point for small businesses is a phone number and a website. And while this may still be true, getting the filings right and even choosing the right business structure is arguable as important. This image from the company’s website certainly strikes a chord.
Begin with the Basics
The company’s service offering starts with helping the entrepreneur figure out the best structure. From there, things move into a more traditional start-up toolkit. You know, business email, business website, and even some credits for Google Ads. The company claims some 80,000 businesses have launched using its platform. It would seem logical for ZenBusiness, like other players in the local, small business space to offer an expanding set of integrations and solutions through a marketplace.
The company itself is organized as a public-benefit corporation presumably as a means of demonstrating its commitment to small business. Ross Buhrdorf is the founder. He’s the ex-HomeAway CTO, ex VP of Engineering at Salion, and an early player at Excite. ZenBusiness plans to add 100 employees to its current staff of 150.
Like Thryv (also based in Texas) the company has benefited from Covoid-19 tailwinds and has seen revenues increase by 100% in 2020. We’d guess their current ARPU at somewhere around $120 per year which would put their ARR just under $10 million. That would be the logical threshold for its new financing round of $55 million. The latest round puts its total raise at just under $75 million since its founding five years ago.
According to the TechCrunch story, another new area of growth for ZenBusiness is adding financial services. Under the label of ZenBusiness Money, they bought Joust, another Austin based startup, earlier this year. Joust had raised $5.5 million according to PitchBook and ZenBusiness paid $4.6 million according to TechCrunch.
Time is Always of the Essence
Founder and CEO Buhrdorf realizes that time is of the essence for solopreneurs. As he told said to TechCrunch, the company emphasizes customer service. “When you call us up, we answer right now within 60 seconds, and we think that’s important,” he told TechCrunch. “And we answer our emails with a very tight timeframe too, within 24 hours, and many within a few hours. And we’re always on chat.”
While that is well and good, we’d argue that even 24 hours is too long and we’d expect most other small business owners to agree. We also wonder if in 12 months the company will be yet another in the vast portfolio of Vista Equity Partners. After all, there’s no travel required to do due diligence.