Startup Spotlight #2: Everything Old is New Again
When launching a startup, we often chase the sexiest, most innovative ideas. But how many of those ideas end up as a profitable business? Let’s be honest, not many. Sometimes, it’s good to be boring.
About the project
Haven is an online platform that makes taxes and bookkeeping easy for startups and small businesses. Exciting, I know.
It has the ability to integrate with popular accounting and payment systems, from which it can automatically pull data to be reflected in journal entries. Anyone who’s involved in entrepreneurship will know what such platforms do and what basic functions they serve, so I won’t bore you with that.
However, Haven has a cool trick up their sleeve that could greatly benefit any US-based startup — they help clients tap into the $100+ billion of tax credits offered yearly by the IRS. That’s something that very few entrepreneurs think of, and even fewer take advantage of. But it’s there, and Haven’s platform makes it extremely accessible by doing most of the heavy lifting (i.e. paperwork). The amount of tax credits will vary greatly depending on the size of the company, but it can go as high as $100k.
The startup claims that the main competitive advantages of the platform are its price (10% cheaper than outsourced bookkeeping) and time-saving abilities (allows executives to spend 10% less time on accounting hassles).
It also gives companies the opportunity to earn 10% more on the “free” money lying around in their accounts and discover 10% more opportunities to save money through tax deductions.
Haven rolled out its platform in the Spring of 2023, and has since attracted over 120 corporate clients, surpassing $3 million in revenue after ∼14 months and successfully breaking even. The startup recently held a new funding round, garnering around 50 angel investors. The exact figures remain undisclosed, but should in theory be around the $1 million mark.
What’s the gist?
The most interesting thing about Haven has nothing to do with the platform itself. It has to do with the fact that despite their product not being anything innovative or “sexy”, the company managed to achieve numbers that most startups only dream of achieving. Breaking even in just over a year is a rare occurrence in the tech world, and one we should explore deeper.
So how did they do it?
First, let’s look at Haven’s dynamic pricing model. The company’s pricing is determined by a given client’s total monthly expenses, which allows Haven to earn more from those who can afford to pay more, while lowering the barrier to entry for smaller companies. This can often prove a better strategy than going with fixed plans, allowing for more flexibility on both ends.
It’s also important to note that, unlike most competitors, Haven positions itself as an “accounting firm” rather than a platform for bookkeeping. But that is very much intentional — it immediately lets you know that Haven will do all the bookkeeping for you, instead of simply giving you a platform to do it yourself. The platform only acts as an interface to help you connect and collaborate with Haven’s accountants in a more structured and streamlined way.
Another thing to note about Haven’s positioning is their choice to focus on the founders, not the managers. Founders usually like to delegate — especially when it comes to accounting. But with 35% fewer people taking the CPA exam and 75% of accountants nearing retirement, the US is currently facing an “accountant crisis”, making it much harder to find someone you can trust with your company’s finances. In light of this, Haven’s value proposition seems exceedingly clear.
Selling accounting services to established companies can be quite tricky. It’s extremely challenging to persuade founders to adopt a new platform when the one they currently use already does the job. This is a common theme with accounting firms and platforms: they tend to solve their clients' problems, and in return the clients tend to stay loyal. Poaching these clients can often be near-impossible.
But startup founders are generally not yet attached to any accounting platform or firm. And with over 5 million new companies being registered in the US annually, Haven’s pool of potential clients is substantial. If the company manages to tap into even a small portion of that market, we might have a potential unicorn on our hands.
Drawing conclusions
Out of all service industries, the ones that are digitizing fastest are those where demand consistently exceeds supply. Accounting is one of those industries. Every year millions of new companies appear on the market - that’s millions of new potential customers who need accounting services and who don’t need to be convinced of their value or merit.
At the same time, accounting is one of the areas primed to be completely transformed by AI. There is an emerging trend among firms to increase the level of accounting services from simple bookkeeping to active financial analysis and asset management, which will inevitably require the use of advanced AI algorithms.
In the end, Haven’s success teaches us an important lesson. That is, when it comes to starting a successful business, it doesn’t have to be some world-shattering, revolutionary idea. While the accounting industry has been around for ages, there’s always things to improve, especially with the arrival of new technologies. All you need is the right approach.
Haven’s approach can be broken down into a few simple steps:
focus on startups and small businesses that are yet to sign with a large accounting firm
provide a holistic service that covers everything from taxes to asset management, freeing up clients’ time
leverage new technologies, such as AI, to offer clients a more modern accounting experience
position their services as services, rather than a tool/platform
make use of dynamic payment plans to attract more clients while never undercharging for the service
Following this simple blueprint, Haven has catapulted itself to the forefront of a very competitive market, proving once again that success is never about the idea – it’s all about execution.
What are your thoughts on the company? Could any of these lessons be applied to your industry? Let us know in the comments below!
Company info
Haven
Website: usehaven.com
Last funding round: undisclosed, 18.04.2024
Total funds raised: undisclosed