KashFlow, the feisty UK startup taking on incumbent players like Sage with its cloud-based accounting software for SMEs, has decided it’s time to step on the gas. But to do this, the company is actively seeking a “strategic investor” and isn’t ruling out selling a majority stake, according to a report distributed by Financial Times-owned Mergermarket.
That could entail pairing up with one of the “large traditional accounting services groups” that would benefit from its Software-as-a-Service offering or another software company that would bring both cash and new markets. The aim, according to the report, is to increase KashFlow’s annual turnover from its current £1m (£140,000 in profit) to £2m in 2011. The startup currently claims 10,000 paying users.
However, in an internal memo sent out to KashFlow staff by CEO and founder Duane Jackson seen by TechCrunch Europe, we’ve learned further details of the company’s thinking.
Jackson talks about KashFlow’s existing partnership with BarclayCard and “other deals on the table” and how they could stretch resources. What’s required to accelerate growth is a bigger budget for marketing and an increase in “headcount and some experienced hands”. Especially if KashFlow is to continue taking on much better funded competitors head-on.
In the memo he also candidly says that if KashFlow was to find “the right company with the right people” as an investor, stepping down as CEO is also a possibility. Were that to happen, Jackson would instead focus on technology and/or marketing, leaving day-to-day operation to somebody with more experience in running a high-growth company.
We’ve reached out to Jackson for clarification – especially in light of Mergermarket’s talk of selling a majority stake – and in particular why VC money doesn’t seem to be an option under consideration.
He says that he “would let go of a majority share for the right deal, but it’s not ideal or what I’m aiming for.” And that while VC offers are flattering, he’d much rather a “strategic partner with an existing customer base and complimentary products.”
As for an exit, not so fast, says Jackson.
“I don’t want to exit yet, there’s too much still to be done.”