A year ago, Mint, which made software to track personal financial data, was bought by Intuit for $170 million. Now, a new startup is trying to do a similar service for small businesses. Think a new version of Intuit's QuickBook.
InDinero, a service that is designed to help entrepreneurs run their business without having to learn complex accounting software, raised $1.2 million for its seed round of capital.
Rather then raise funds from venture capital firms, the startup looked to a bevy of angel investors. Investors, including David Wu of Intuit, Steve Blank, author of The Four Steps to the Epiphany, Dave McClure of 500Hats, Jeremy Stoppelman of Yelp, Keith Rabois of slide, Fritz Lanman of Microsoft, Christina Brodbeck of You Tube and Jawed Karim from YouTube.
The team at inDinero wanted to rely on investors who would be advisers as well as funding sources, Jessica Mah, the founder of inDInero told Vator in an interview. "I've known Dave McClure for three years and he's been helping me out long before he gave us any money," she said. "Jawed's a great guy too. The kind of guy who will sit down with you for hours and help you sort out your business plan," she went onto say.
She shied away from venture capital firms because she felt that they, "Don't really help."
Clearly, the investors are betting that inDinero can be a major game changer.
"Intuit is ripe for reinvention," said Steve Blank, via email. "QuickBooks is the Windows 3.1 of financial software. Someone will do a better job. It may be these guys."
When asked to compare her service to QuickBooks, Ms. Mah replied,"When you use complex accounting software you need to know about the terminology and practices of accounting. inDinero is not accounting software. We tell you how your business is doing..."
inDinero initially set out to raise only $500,000. But interest drove that number to $2 million. The company only took $1.2 million because Mah and her co-founder, Andy Su, did not need any more funds to meet their next milestore.
"We can always raise more funds again in 18 months or two years down the line," said Ms. Mah.
They plan to invest the money in hiring and product development, but they also have a plan for long term management as well, "It was suggested that we plan like we only raised $500,000 and we'll be running for 18 months. With that plan we will have 36 months of runway," Ms. Mah told Vator.
Having this many successful investors backing them is bound to come with more benefits than disadvantages. On the bright side, should inDinero do well, it will have plenty of potential sources to tap for future rounds of funding for this startup or future new ones. Many of these people have a tremendous Rolodex, raising the probability of inDinero's chances to get to the right people at the right companies. Moreover, angel investors are less likely to put too much pressure on startups the way venture capitalists do. Many have had their own success stories and often just give back with the knowledge that they may never get any of their funds back. Of course, we're also betting inDinero actually provides a return, and a nice one at that.
For those of you who are curious Aaron Patzer, the founder of Mint wasn't even approached for funds "It would have been a conflict of interest", was all Ms. Mah would say on the topic, "Though we are working with a few other Minters.", though she would not disclose whom specifically.
(Image souree: Berkeley)