French startup Indy recently closed a new $44 million (€40 million) funding round with BlackFin Capital Partners leading the round. Indy started as an automated accounting platform for freelancers and other self-employed people.
But the company has slowly been iterating its product to become an all-in-one platform for freelancers, from accounting to business formation to tax preparation to invoicing and (soon) business banking services. This is an interesting example of the positive effects of consolidation in a software-as-a-service business. And it could inspire other entrepreneurs catering to a highly fragmented market of potential customers.
As long as you’re running a business without any employees, Indy wants to give you all the administrative and financial tools you need to run your business. It is aimed at self-employed people, freelancers, doctors, architects, lawyers, etc.
Other investors participating in the recent funding round include La Maison and iXO. Indy closed its funding round this summer. Although the startup declined to share its valuation, the company said it was higher than the company’s valuation after its previous funding round of €35 million ($38.3 million at current exchange rate).
Indy’s main feature remains its automated accounting feature. When you create an account, you can automatically start syncing your bank account with Indy so that past and future transactions are automatically retrieved.
After that, Indy tries to automatically categorize each transaction. In some cases, users must indicate the transaction type in the application. Customers add a receipt to each transaction: VAT is automatically detected and the receipts are then automatically archived and can be used in the event of a tax audit.
At the end of the year, Indy can pre-populate tax forms and send them directly to the corporate tax office. Likewise, Indy manages VAT declarations.
Indy’s accounting tools are free and unlimited. Once you want to generate tax forms and submit them, you need to pay a monthly subscription. But it is still much cheaper than calling on an accountant.
“As we are on average four to five times cheaper than an accountant for the tax preparation part, many people who use our free services will also subscribe to our paid services. But it’s up to them, they can also decide to hire an accountant,” Côme Fouques, co-founder and CEO of Indy, told me.
Product Bundling Manual
With this simple product positioning, Indy managed to convince tens of thousands of paying subscribers. But the company didn’t stand still as it rolled out other products to build Indy into a suite of products.
For example, you can now create quotes and invoices from Indy and store them in your user account. Of course, you can always use Word or Excel for these documents, but there are some advantages to having these documents directly in Indy. For example, when a customer pays an invoice via bank transfer, Indy can automatically mark an invoice as paid.
Likewise, before you can use a product like Indy, you actually need a company to bill customers. In France, even if you are self-employed part-time and looking for additional income, there are some administrative formalities to complete and the options are numerous.
The startup helps you make the right decisions when creating your business. Unlike traditional business formation services, Indy offers this service for free as long as you purchase a subscription, but you can cancel this subscription at any time.
These products increase the stickiness of the product and users are more likely to recommend Indy to other freelancers. Likewise, the sales funnel works particularly well since a good portion of people wishing to become independent will first have to choose a business creation service.
The next step is clear: Indy will become a fintech startup. In a few months, the startup will offer a free professional bank account with a payment card. Again, it makes sense to bundle this service because current customers need to switch between their banking app and Indy to control their business finances.
Current companies working in the merchant banking space, such as Qonto and Shine in France, focus heavily on small and medium-sized businesses. They don’t have a core product offering with basic features that would work well for freelancers. “Business banking for a self-employed person is pretty basic: they want to send money via transfer, receive money via transfer, have a payment card, and that’s all there is to it. do,” Fouques said.
And Indy can then leverage this fintech angle for other services. For example, the company could offer new payment methods for invoices, such as online card payment, QR code payment or using the smartphone as a contactless card reader.
“Because we offer all of these features in the same service, we get huge economies of scale and we save money on user acquisition costs,” Fouques said. “This means we can offer a whole range of services for free – services that would otherwise have to be paid for elsewhere. At the same time, we have a super healthy and hyper scalable model.
Some companies have identified the same problem in the United States, such as Found and Lili: they have both raised around $80 million according to Crunchbase data. Indy is not going to compete directly with these well-capitalized companies. Instead, the French startup is looking to other European countries to see if it can replicate its service in other markets.
But Indy remains very focused on its domestic market since there are millions of independents in France. The market opportunity is already significant. And it looks like Indy has found the right distribution strategy.