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Embedded accounting startup Layer secures $2.3 million toward Quickbooks replacement goal

Built-in finance we usually hear when brands and non-financial companies want to offer financial products or services — such as banking, insurance, lending and payments — to give customers a better user experience.

Layer leans towards that better user experience, but with built-in accounting. Its customers are those, such as Square or Toast, that work with small and medium-sized businesses to offer accounting and bookkeeping features within their products. These larger companies would build Layer’s tools into their platform for small businesses to use.

Small and medium businesses can now access bookkeeping and accounting tools within the Square or Toast platforms they use to run their business. This is instead of using separate accounting software, such as Quickbooks, to manage their business finances.

Justin Meretab, former head of product on Square’s banking team, launched San Francisco-based Layer in 2023 with Daniel O’Neel, former head of engineering at Wealthfront. Their goal was to create a set of APIs that allow users of the platform to transfer data from their small business users to Layer. Layer then provides connections to external bank and credit card accounts to pull data and transfer it to Layer’s general ledger and account system. This allows small businesses to then build a complete picture of all their financial data.

In a way, Layer is like Unit or Check, but for SMB Accounting instead of Banking and Payroll. In fact, the company’s goal is to completely replace legacy accounting and bookkeeping platforms like Quickbooks, Meretab told TechCrunch.

Did the investors laugh at them when they explained how they wanted to replace Quickbooks? Species.

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«Many investors we spoke to told us this was a lofty goal given how much Quickbooks currently dominates the SMB accounting market,» Meretab said. «However, they also agree with our core belief that there has been a fundamental shift in the way SMEs run their businesses which now enables the disruption of Quickbooks’ moat.»

The main accounting dashboard SMBs see when they access Layer's embedded accounting software within their existing SMB platforms.
The main accounting dashboard SMBs see when they access Layer’s embedded accounting software within their existing SMB platforms. (Image credit: layer)

Meretab further explained that over the past few years, platforms like Square, Toast and Shopify have become the hubs where SMEs run their businesses. These platforms have built deep relationships with these clients and as a result are increasingly helping them manage all of their day-to-day operations.

Meretab has been with Square for six years and has heard from customers that they want to do their accounting directly within these platforms instead of in separate tools. He and O’Neel talked to potential clients and learned that it would be difficult to build that kind of embedded accounting feature in-house, so they did.

Layer is not alone here. There are some companies that do embedded accounting for small and medium businesses, such as Hurdlr and Fiskl. However, Meretab said Layer is different because it focuses on building comprehensive accounting products without clients doing much of the work themselves or even having to understand how accounting works.

The company has a small set of early clients, four in fact, that have launched their own SME accounting products built into their platforms. Customers serve a wide range of small and medium-sized businesses, from truck drivers to medical clinics, and work together with more than 100,000 small businesses.

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«One surprise is that many SME customers have told us that our embedded accounting views are actually the first time they’ve ever seen a clear view of their business’s profit and loss,» said Meretab. «Many have tried using separate accounting software, but found it too complicated or difficult to sync with their main operating software.»

Layer’s different approach also attracted investors. Better Tomorrow Ventures led a $2.3 million pre-launch investment and was joined by a group of executives at companies including Square, Plaid, Unit and Check.

The company plans to deploy new funding this year to expand its services to additional small business software platforms. It will also expand its four-person team to include engineering and business roles.

«During this year, our goal is to significantly increase the number of customers, for example triple the number of customers and increase revenues,» said Meretab.

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