Bench Accounting Implosion: The Rise and Fall of a VC-Backed Startup

Unexpected Shutdown of Bench Accounting

December 27th initially promised a peaceful holiday weekend for many.

However, a state of disruption unfolded for a significant number of small business owners who relied on Bench, a Canadian accounting and tax technology company.

The company had previously secured $113 million in funding from investors including Bain Capital Ventures and Shopify.

Account Access Disrupted

Thousands of users discovered they were unable to access their Bench accounts coinciding with the beginning of the tax filing period.

The entire Bench website became inaccessible, displaying only a notification announcing the company’s cessation of operations after 13 years.

Sudden Job Losses

Hundreds of Bench employees were reportedly terminated immediately, without prior warning or severance packages, according to accounts from former staff members shared with TechCrunch.

Attempts to contact employees via email on the day of the shutdown resulted in delivery failures.

Customers Left Unaware

The abruptness of the closure meant that some customers were completely unaware of the situation until contacted by news outlets.

One such customer, Justin Metros, co-founder of Radiator, expressed shock at the manner of the shutdown.

Customer Reaction

“I had no prior knowledge of this event,” stated Metros.

“I’ve rarely encountered a company that simply ceases operations in such a fashion; it’s truly astonishing.”

Metros had stored years of critical data within the Bench platform and had even been highlighted on the company’s website prior to its outage.

Challenges with Automation at Bench

Bench initially presented itself as a technologically advanced startup specializing in bookkeeping and tax services, offering a user-friendly platform designed for small and medium-sized businesses. Prior to its closure, the company reported a customer base exceeding 12,000.

Recent efforts to integrate AI and other automated systems are cited by several former employees as a contributing factor to the company’s difficulties.

The practical implementation of automating accounting processes, such as expense categorization, proved more complex than anticipated, as revealed by previous staff members to TechCrunch. A former employee asserted that AI was considered essential for scaling the business, but the resulting tools were poorly executed and unreliable.

This over-dependence on automation, sometimes reducing the role of human bookkeepers, led to processing delays. Work was frequently transferred between teams rather than being handled consistently by a single individual.

These delays ultimately resulted in customer attrition. A former staffer indicated that some clients were still awaiting completion of their 2023 bookkeeping as late as September 2024, significantly after crucial tax filing dates.

Multiple rounds of staff reductions occurred at Bench beginning in late 2022, according to accounts from former employees. LinkedIn data shows a decline in reported employees from nearly 700 in January 2023 to under 400 by the close of 2024.

Internal Disarray at Bench

Challenges in operational execution were further intensified by instability within Bench’s leadership. Ian Crosby, the company’s initial CEO and a co-founder, departed in 2021 shortly after a $60 million Series C funding round was secured.

Crosby alleged that certain members of the board instigated his removal, seeking a replacement with a more conventional CEO profile, following disagreements over the company’s strategic direction.

In a post on LinkedIn following the company’s closure, Crosby expressed his hope that Bench’s experience would serve as a cautionary tale for venture capitalists considering replacing founders in an attempt to “upgrade” a company. He stated his belief that such actions are rarely successful.

A Succession of Leadership Changes

Jean-Philippe Durrios, formerly the CFO, assumed the role of Bench’s second CEO. His primary focus, as described by previous employees, was achieving profitability for the organization.

The implementation of automation was considered a potential solution, aiming to reduce reliance on expensive manual labor required to support the company’s extensive customer base. However, this strategy proved ineffective due to ongoing execution problems, customer attrition, and diminishing investor enthusiasm for companies not centered around artificial intelligence.

A further change in leadership occurred in November 2024 with the appointment of Adam Schlesinger as CEO.

Schlesinger, an executive-in-residence at Inovia Capital – a venture capital firm with a stake in Bench – was brought in to oversee a potential sale of the company.

The Path to Acquisition

According to Schlesinger, a former Microsoft executive and recent president of Siempre Tequila, the decision to sell Bench was already underway upon his arrival.

Schlesinger explained to TechCrunch that he was tasked by Inovia Capital with managing the acquisition process. He characterized his role as guiding the company through a difficult and complex undertaking.

A Surprising Turnaround

The initial attempt at restructuring proved unsuccessful. On December 27th, Bench unexpectedly ceased operations, leaving its staff without prior warning or severance packages, as reported by several former employees to TechCrunch. This closure resulted from a bank demanding repayment of Bench’s outstanding venture debt, according to information obtained by The Information.

Despite the abruptness, Bench had continued to generate sales until the very day of its closure, a former staff member confirmed.

The shutdown garnered significant media coverage across both the United States and Canada. Remarkably, it was this publicity that ultimately led to Bench’s rescue, Schlesinger explained to TechCrunch.

“It was only following the shutdown, and the subsequent press coverage – including yours – that the wider world became aware of our availability for sale, which then generated considerable interest,” Schlesinger stated.

“The last 72 hours have been virtually sleepless,” Schlesinger conceded.

The acquiring parties were somewhat unexpected. Jesse Tinsley, CEO of Employer.com, a San Francisco-based HR technology company, was on vacation in Florida when he learned of Bench’s situation, one day after the public announcement of the shutdown. Tinsley, who oversees a portfolio of HR and recruitment-focused businesses, had recently purchased the Employer.com domain name for approximately $450,000, as he shared on LinkedIn.

Tinsley and his team then dedicated the next 36 hours to negotiating the terms of a deal. By Monday morning, Employer.com had formally announced its intention to acquire Bench, though the financial details remained undisclosed.

“I hadn’t had a formal introduction to anyone from the Bench team prior to Saturday afternoon,” Tinsley later posted on Twitter, accompanying the message with a modified image reminiscent of Elon Musk carrying a sink into Twitter headquarters, but featuring his own face and a bench superimposed into the scene. “Nevertheless, we’ve preserved hundreds of jobs and prevented thousands of customers from being left stranded.”

Questions Surround Bench's Future

Employer.com has announced ambitious plans for the revitalization of Bench. As a first step, job offers are being re-extended to a significant number of former Bench employees, according to Jennifer Bouyoukos, Bench’s Chief People Officer, in a statement to TechCrunch.

Furthermore, the company assures that existing customer contracts will be honored and full account servicing will continue, as communicated by Tinsley via Twitter. Previously, Bench had advised its clients to request a six-month IRS extension to locate alternative bookkeeping services.

However, the long-term viability of Bench remains questionable, particularly considering the circumstances of its rapid sale.

Typically, acquisitions involve a lengthy process of due diligence spanning several months. Conducting such thorough investigations over a holiday weekend proves impractical. Prior to acquiring Bench, Employer.com’s expertise lay in areas such as payroll, recruitment, and broader HR functions, lacking direct experience in accounting – a field that presents unique challenges.

Concerns have also been raised regarding the potential impact on service quality following the abrupt dismissal of Bench’s entire workforce on December 27th. While many former employees are being rehired, reports from three ex-staff members indicate that some are only being offered 30-day contracts.

Matt Charney, Employer.com’s chief marketing officer, responded to these concerns, stating that despite the speed of the deal, it was vetted by “multiple legal firms.” He expressed confidence in Bench’s established reputation and performance history. Charney also explained that the acquisition focused on Bench’s personnel, accumulated experience, and existing customer base, which will facilitate rapid knowledge transfer.

Employer.com refrained from providing specific comments regarding the 30-day contracts at the time of reporting. Following publication, Jennifer Bouyoukos, Bench Chief People Officer, clarified that these short-term contracts are a temporary solution to “ensure continuity” while establishing the infrastructure for permanent employment in Canada.