We're thrilled to be leading Pilot's Series B round. Pilot has taken on an overlooked but strategic industry segment — bookkeeping. Here's why our partner Mark Goldberg thinks bookkeeping represents a massive opportunity for automation.
Let’s get this out of the way: bookkeeping can be dry - but that doesn’t mean the business behind it has to be. In fact, it’s one of the most exciting, yet overlooked, areas in fintech today - a service industry that can finally be automated with technology, and that also serves as a gatekeeper to the rest of a company’s back office. This is why we’re thrilled to be leading a $40 million Series B into Pilot, in partnership with Stripe, who’s joining the round as a strategic investor. This follows our initial $15 million Series A investment just over a year ago.
I know bookkeepingcan be tedious because I’ve done it. In college, I ran the finances for my college newspaper. Every month I would compile invoices, bills, bank accounts, and payroll data to update our financial statements - and determine whether we were making or losing(mostly losing) money. It was by far my least favorite responsibility at the paper, and I spent hours and hours ticking and tying numbers by hand. This experience has stayed with me, so much so that when I joined Index many years later it was one of the markets I hoped to invest in. I knewthat in the right hands, technology could completely revolutionize this space.
My newspaper experience was not unique. Whether you run a yoga studio or a startup, a gym or a coffee shop, you need to keep track of your financial health. It’s not just good business hygiene - it’s required for tax preparation. It may be a time-consuming and error-prone task, but it’s also essential for every business in the world. An estimated $60 billionis spent on bookkeeping and accounting in the U.S. alone; it’s a fragmented industry of local players where quality is often lacking, and customer satisfaction is on par with a trip to the dentist.
Pilot removes the stress and confusion from bookkeeping, and puts your finances on, well, autopilot. Customers get a dedicated account manager, fast and accurate reports and actionable business insights. It’s one of the stickiest productswe’ve ever seen amongst startups and small businesses, and referrals drive a significant portion of the company’s exponential growth.
New digital services across banking, payments, and payroll have made this opportunity possible. Now, most of the bookkeeping tasks that were done by hand can be automated. Structured inputs, like a list of transactions from your bank account, in; structured outputs, like a journal entry, out - and withPilot’s proprietary and powerful technology in the middle. Pilot is transforming a service industry into a software category.
I first met Pilot’s founders Waseem Daher, Jeff Arnold and Jessica McKellar at Dropbox in 2014 when their second startup, Zulip, was acquired. Each founder had become a well-respected leader there: Waseem for his combination of technology expertise and business acumen, Jessica as a luminary in the Python community and a tremendous engineering manager, and Jeff as one of the most thoughtful and creative product heads at the company. All three worked with the efficiency and closeness you’d expect from a team that has worked together for over a decade, since theymetas studentsat M.I.T. When they brought the band back together to form Pilot, it was an obvious choice for us to invest.
Bookkeeping is just the beginning of a huge opportunity for Pilot. We’ve heard this from customers, who are asking for help with other products and services. Once you win the trust of your customers by handling their most sensitive financial information, the relationship naturally extends itself to other areas. We believe Pilot will become the central platform for a company’s back office, from loans and credit cards to business analytics and insurance. And with today’s announcement of Pilot Tax, they’ve taken the first step in expanding their offerings.
Startups, small businesses, and even college newspapers deserve a smarter solution for their back office. They should be able to focus their creative and entrepreneurial effort on building what they love - not managing their books. Pilot is making that possible, and we’re thrilled to be a part of it.