Backops raises $1M to be SMB's outsourced back office

Startups and small businesses now can rent HR, accounting and financial services off the cloud

If you're presiding over a small business, and many of our readers and those in our community are, then you know what it's like to be hampered with operating issues like bookkeeping, taxes, employment contracts, vendor management, customer billing, and keeping track of vacations and sick days, etc. The list goes on and on that often, an employer has to spend more hours doing this back-office work and less time buiilding a business.

If this is you, there's a service that can help. San Francisco-based Backops has just raised $1 million in seed funding to be the back office for small- to medium-sized businesses, from your local bakery to high-tech startups with angel and VC financing. Angel investors in Backops include Mark Pincus, Arjun Gupta, Michael Baum, Doug Barry, Seth Goldstein, Babak Nivi, Chris Redlitz, Naval Ravikant, and Farhad Mohit. 

"At Backops, our customers are the CEOs," said Kristen Goldstein, co-founder and CEO of Backops, in an interview with me. "The other customers are the national network of smart, work-at-home moms who work for the company."

Essentially, Backops has brought together a team of software engineers, CPAs, finance types and HR managers (and growing) who want to work from home but who are also super qualified back-office experts. "These are smart, educated moms who want to work from home and be with their kids," said Goldstein, who is also a mom of three. In fact, Goldstein started Backops in 2010 while her daughter Athena was just starting school, and she was looking for a suitable job that would allow her to be with her kids, and would utilize her skills. 

"9 am to 3 pm is a real long time to do yoga," said Goldstein, who decided to put her financial experience as a decade-long CFO for startups to work. Goldstein had previously been the founding CFO at Loyalty Lab. Loyalty Lab was sold to Tibco for $23 million for cash plus debt in December 2010.

Today, Backops handles human resources, accounting and finance functions.

"Most busineses have bad bookkeepers," said Goldstein. In addition, "there’s nothing that the bookkeeper provides that’s forward-looking. We publish a Web-based weekly operating report that’s delivered in real time. CEOs can view their executive dashboards via smartphone and complete back-office tasksin a few minutes. They’re no longer bothered all week long to review invoices, Approve payroll, track revenue and write checks. We reduce all that headache]... We save them hours of time every week that they don’t have because they’re managing their business."

When a client hires a new employee, Backops handles the paperwork, including digital signatures for the contracts. Everything is done digitally, said Goldstein. If a client has invoices coming in, they can also have Backops make the payment. 

Right now, Backops has nearly 50 customers. They pay per employee, though Goldstein wouldn't disclose how much the company is charging, only to say that the price for services offered is less than half the cost of hiring someone full time.  

The new capital will be used to triple the engineering team and create a platform to automate the back office operations. Goldstein also hopes to partner or bring on the many freelance bookkeepers or small accounting firms that want to use the Backops platform to make their businesses more efficient. 

"The idea is simple. Instead of hiring a team of finance and HR professionals to manage your back office, turn to the cloud and rent it as you need it as a service," said Mark Goldstein, co-founder and chairman of Backops (and Kristen Goldstein's husband). "You'll get the collective wisdom of nationwide talent, access to real-time analytics, and a team available to answer questions at less than half the price of a full-time employee. It's like Uber instead of having your own car and driver."