The Charleston accounting startup Ceterus says it has raised $6 million in a bid to expand its automated bookkeeping services.
The new financing round, announced this week, comes just over a year after the startup announced its first venture capital funding, and the combined $10.2 million in funding places Ceterus among the region’s most successful in attracting investors.
The infusion of venture funding is intended to transform Ceterus from a traditional bookkeeping firm to a technology-fueled accounting service that automates most of its work. The company moved to that model around the same time it moved to Charleston from Michigan about three-and-a-half years ago.
A year ago, Ceterus chief executive Levi Morehouse says, the company had only just begun automating its work. Now, he estimates about 70 percent of its accounting work is handled automatically – from data entry to reviewing financial statements.
"The model is more or less what it was," Morehouse said. "We raised some money last year to prove out the automation, essentially converting our bookkeeping outsourced service business into a technology platform."
Ceterus is far from the only player in that space, and bookkeeping is widely viewed as a white-collar profession ripe for automation since accountants’ work is dictated by well-defined rules and often repetitive.
The world’s largest accounting firms — "Big Four" companies like Ernst and Young and KPMG — have invested heavily in automating their processes, and competing startups have moved in, too, including Vancouver-based Bench, which has raised nearly $33 million for a similar service.
"We’re really impressed with where Ceterus is and how they line up competitively," said Don Rainey, a Charlotte-based partner at Grotech Ventures, the Virginia firm that led Ceterus’s latest round. "For us in the venture business, the presence of competitors in a new market is more encouraging than discouraging."
Morehouse says Ceterus is looking to carve out a niche by focusing on small businesses, especially franchises. Because it specializes on chain businesses, he says, the company has built tools to show clients how their results to similar operations elsewhere.
The new round included three firms that backed the company last year: Charleston-based Alerion Ventures, Durham, N.C.-based Idea Fund Partners and Atlanta-based TechOperators. Terms were not disclosed.
The new funding, Morehouse says, will let the company move into new markets of franchise owners and continue to automate its processes. Eventually, he guesses, 90 percent of accounting work could be handled automatically by pulling in data from cash register systems and bank accounts and crunching the numbers.
The company, which is headquartered on the upper peninsula, has also grown dramatically over the past year to become one of the most prominent players in Charleston’s emerging startup scene.
Morehouse says the company hired its 100th employee this week, roughly quadrupling in the past year. It now counts its clients in the "thousands," he says, about three times higher than last year.