Miami — Launching a startup, overseeing tech, selling, growing and making sure your clients are happy are all incredibly hard things to do. But then there’s all the back office work, including finance and accounting, which many startups loathe because it’s busy work, but at the same time, it’s important it be done correctly.
That’s a problem that Jorge Vargas Neto encountered while getting ready to sell his second company to Rappi. The accountants he had hired had messed up the books, he said. And it took him and his team 2 weeks of straight work to fix them - he’s lucky he had the knowledge to do it himself, as many entrepreneurs would not.
“We were going to close a robust series A for our previous company, and we did an acqui-hire and an acquisition of assets [with Rappi], and when we did this deal we had a really bad experience with the accountants, which in Brazil have a NPS (net promoter score) of 11,” Vargas Neto said. NPS measures customer experience and potential for growth. The number range is between 1-100, where 100 is the best, so 11 is very poor.
Then Vargas Neto learned about an American startup called Pilot, which offers back office services such as accounting and financing for businesses; “That’s when the light bulb went off,” he said. Pilot was recently backed by Jeff Bezos’ fund - Bezos Expeditions - and was last valued at $1.2 billion.
Vargas Neto decided to launch Bhub, a Brazilian startup similar to Pilot, and today the company is announcing a $20 million Series A, just two months after closing a $4.4 million round of funding. This round was led by Monashees and Valor Capital Group, followed by QED Investors, Picus Capital, and ClocktowerVC.
The company has 51 employees, and plans to use the money to add 100 more, invest in marketing, as well as expand to Mexico in 2022.
In addition to accounting work, the company provides a “financial dashboard with relevant KPI’s (key performance indicators),” Vargas Neto said. The “finance as a service” offerings include payroll, payments, forecasting, and bookkeeping.
The company currently has 134 clients. “We’re growing by 3x month over month with an NPS of about 85, so we have all the ingredients to say that we have product market fit,” Vargas Neto said. The company makes money through a SaaS model.
Like many service companies, Bhub’s promise is that they can handle the boring work for you, while you focus on growing your business. “We came to fill in a gap that exists within the startup and SME market. We invite entrepreneurs to rethink their business model, understanding that it’s not necessary to spend a lot of money or waste time on any tasks not related to your core business,” adds Vargas Neto.
In 2020, more than one million companies went bankrupt in Brazil, a combination of the crisis generated by the new coronavirus pandemic and bad financial management. Bhub hopes to improve these outcomes, by building a new category of back office services, which helps entrepreneurs to better manage their companies, saving money and time spent on non-core activities.
“Bhub has shown excellency in the delivery of services and presented significant results in a short operating time. We invest in companies that use technology to transform scenarios and collaborate in the daily lives of Brazilians. Bhub has great potential to lead this movement in Brazil and Latin America, by automating the entrepreneur’s everyday activities,” said Michael Nicklas, Managing Partner of Valor Capital Group.