Accounting and financial controls are some of the most important functions of a modern company, but they are also serious cost centers. Hiring a full-time bookkeeper can be prohibitively expensive, and it can be difficult to find financial analysts and part-time CFOs that a company’s leaders can trust. Companies rely on accounting firms to manage these processes, but firms are often slow and outdated in an internet age where everything is digital and flexible.
Chicago-based Paro wants to completely evolve the way the finance department of a company operates. Its platform allows companies to hire vetted financial professionals such as bookkeepers, accountants, CPAs, and CFOs on a part-time basis, so that they only pay for the services that they need. That added flexibility can mean that processing times can be shortened even while accuracy is increased and costs come down.
The startup announced today that Revolution Ventures, the firm started by ex-AOL founder Steve Case, is leading a $5 million Series A round into the company, with participation from Global Founders Capital and Tom Williams, a prolific venture investor. SF-based Revolution partner Clara Sieg led the investment.
Michael Burdick, the CEO and co-founder of Paro, explained that he learned the ridiculous economics of accounting firms while working his first job out of college at Deloitte. “I was pouring my blood, sweat, and tears into my client engagements,” he explained, but discovered through an engagement budget that “I was getting billed out at $250 plus per hour and my take home was around $30 per hour.” That difference astonished him. “It’s both impressive and infuriating as to the margins that accounting / consulting firms make on their front line staff,” he said.
One reason for that massive discrepancy is that companies aren’t hiring accounting firms just to perform the actual accounting work, but also because of the trust that each firm’s brand evinces. That brand safety has blocked the accounting industry from moving more heavily online or toward freelancing. Burdick, along with co-founder Dan Wywrot, started Paro in 2015 to try to close that gap.
Brand wasn’t the only gap that the company has confronted. Professionals in the financial and accounting world are “conservative,” Burdick explained, and prioritize career stability over risk. That has made building a flexible online labor marketplace for the industry challenging — how can you give up your comfortable firm job without knowing how much money you are going to make going forward? If there is one thing accountants can account for, it is their own paycheck.
To solve this other challenge, Burdick and Paro emphasized repeatedly to me that they are deeply focused on “income predictability” for professionals operating on the marketplace. One way the startup increases that predictability is by delivering client work directly to professionals on the platform, rather than creating a free-for-all marketplace. This also has the benefit of saving financial professionals significant time around selling their services, rather than doing actual accounting work.
Paro hopes its value shines though once it starts to match freelance financial professionals with companies. Financial work differs based on the type of a company (think large multinational versus a smaller SMB), and Paro tries to match each business with talent holding relevant experience. Burdick explained that “a successful track record of working with similarly-sized businesses is only one of an evolving set of criteria we take into account when finding the ideal match.”
The startup disclosed that it has had almost one thousand businesses use the platform to hire accounting talent, and it hopes that the data collected through these engagements can help it fine tune its matching algorithms over time.
Sieg, of Revolution, said that she invested in the company because of its focus on disrupting such a large industry as accounting. Using technology and matchmaking algorithms, “Paro is thereby able to avoid the tremendous inefficiencies that come from large, brick-and-mortar professional services organizations burdened by high partnership and overhead expenses, providing freelancers with higher earnings and clients with significant cost savings,” Sieg said.
Burdick intends to use the funding to expand sales and marketing, as well as continue to improve predictive analytics around future income streams for its workers. “Part of the goal is to educate businesses that there is a much better alternative for any finance and accounting business need out there than the antiquated ways of the accounting world,” he said.
Eddie Lou, the executive chairman of Shiftgig, also sits on Paro’s board.