Last week I reported (story #3) that Bench, a Canadian accounting software platform that helps customers store and manage their bookkeeping and tax reporting documents, abruptly shut down, leaving their customers without access to their data.
I noted that something fishy went on, as it's extremely unusual behavior for a 15 year old company that's raised $113M to shut down immediately and fire all their employees without notice. Bench customers were reporting on social media that the company was collecting money and requiring that customers sign new contracts as recently as a day before shutting down.
Here's an update on that story:
- The company abruptly shut down because it ran out of money.
- A bank had called in Bench's venture debt, forcing the shutdown.
- Bench told unsuspecting staff the company was insolvent.
- Bench's major investors spent last weekend negotiating a quick sale to Employer.com for an undisclosed sum.
- The customer portal was restored after 72 hours of downtime.
- The company is trying to rehire many of the hundreds of staff it laid off.
- I'd imagine holding onto talent is going to be a major challenge moving forward, even after the acquisition, as every employee knows chops are coming.
- Customers are pissed and lost trust in Bench, and in VC-backed online bookkeeping tools in general, wondering if they should continue to trust their most sensitive business data to startups as opposed to legacy service providers.
- Every Bench-alternative came out of the woodwork this past week hawking their wares, attempting to capitalize on customers' distrust of the company.
One thing that's yet to be answered is — how could Bench have let it get this far?
Your venture debt doesn't just suddenly get called in. The money doesn't just suddenly run out.
I'm guessing this could have been avoided, but there was either ego, naivety, delusion, or all the above at play here, and poor planning left Bench with not enough cash in the bank to keep the lights on.
$113M in funding was evaporated. I bet Employer.com got a deal of a lifetime, as Bench had absolutely no room for negotiation at this point.