Thanks to the newly released bankruptcy filing, clear photos of the bench’s downfall are now appearing.
The records show that Canada-based startups that provide cloud accounting software for small businesses are consistently struggling to reach profitability . It burned $135 million from its founding in 2012 until September 2024.
By the time of the collapse, the bench had been forced to close due to a “mobility crisis,” records say. The bench had $800,000 in cash left in its Canadian account, while another account for the US entity was under $400,000.
The benches have made some progress in reducing burns in recent years, filing shows. According to former staff members, financial improvements were the main mission of the former CFO of Bench, the second CEO of the bench, who took over in 2022 and began implementing layoffs.
For example, the bench lost nearly $30 million in revenues from March 2022 to March 2023, with $42 million, while the bench reduced its losses in half of the next fiscal year, increasing its revenue to $49 million. I did.
However, that was not a sufficient improvement to stop bench losses from building up. As the company struggled, in June 2024, the Bench’s biggest lender, National Bank of Canada (NBC), provided loans that allowed the bench to take over $40 million in loans per filing.
That gave the bench time to shop for the third CEO’s task, sales. NBC boarded: December 12, 2024 – Just 13 days before the bench collapse – NBC has signed a new funding and patience agreement with the bench, and filing temporarily temporarily repaying the startup’s loan repayment obligation I have agreed to stop or change it.
The record doesn’t specify exactly why the bench will shut down just two weeks later. Information reports that the bank (probably NBC) is called on the bench venture debt. Newcomer reported that NBC refused other concessions as the bench was shopping.
NBC did not respond to requests for comment from TechCrunch. NBC owes $51 million on the bench, and this number continues to be accrued due to interest and other fees.
Anyway, the bench is now heading down a new path after the US-based Employer.com announced it had planned to acquire the startup just 72 hours after collapsed. The process is based on a contract that “considers” the February 28, 2025 deadline for each filing.
Still, bench bankruptcy offers a window into the risk of too much debt for startups. And venture debt lenders will play a major role in the shutdown of fire and startups, which are expected to continue with this year’s fast clip, experts say.
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