On average, sole traders spend 7 hrs a week and $400 a month managing their tax and financial admin. They have to budget for, calculate, and pay their tax, GST, Medicare levy and superannuation contributions.
In August 2020, we asked the question, "Is there space for a new business bank in Australia?" that would use technology to seamlessly integrate tax and accounting and reduce this headache for small businesses. We spoke with six startups in ANZ, including James and Claire, the founders of Hnry. Their perspective was that sole traders don't want a new bank account to help them do their taxes quicker; they want someone to do it for them.
Hnry customers get their own bank account and can create invoices, receive payments, and log expenses. Hnry will then automatically calculate their taxes, pay the right amount of tax each month, and prepare and file tax returns whenever they're due. Their pricing model scales with the sole trader's business, charging 1% of income paid into the account.
Since we first met Hnry, they've grown to become the largest accountancy firm in New Zealand and launched in Australia. Most of their customers join through word of mouth, and once a customer signs up, they stick around, leading to excellent unit economics and strong capital efficiency.
While we loved the large market of sole traders and the innovative product approach, what really set Hnry apart was the execution of the team.
Living in the fast lane
The best startups appear to live in fast forward. They get considerably more done in a day than regular people. When you're trying to beat the competition to win a market, this can be the defining factor. The Hnry team has this quality. You're continually asking yourself, "how did they put that together at such high quality that quickly?!"
Knowing your metrics inside out
Hnry's board decks are a VC's dream. They track every metric in the product to understand engagement and where there may be friction in the product flow, helping them see issues sooner and know where to invest product time. The financial metrics are similar–you can quickly see MRR, margins, churn, cohort retention, CAC payback and burn multiple. In a volatile macro environment, we built confidence that this team knows all the key drivers of their business and will make decisions quickly to ensure each of those metrics remains world-class.
One of the reasons we like to meet founders long before we invest is to see them say what they're going to do, and then do it. Where most founders drastically underperform the 2-year revenue forecasts they present at each funding round, every time we caught up with James, Hnry was bang on target, building trust that they could hit future forecasts.
For all these reasons, we're excited to lead Hnry's $35m Series B round to help them accelerate growth and continue to reduce financial stress for sole traders all around the world.