Austin—ScaleFactor, a company that sells small businesses a machine learning-based program that automates accounting work like bookkeeping, has raised $2.5 million in seed funding from a group of investors that include Next Coast Ventures and Techstars Ventures.
ScaleFactor plans to use the funding on product development. The company participated in the Austin Techstars accelerator earlier this year, and had previously raised $370,000. Other investors in the new funding round include Firebrand Ventures, Matchstick Ventures, Edison Factory, and Flyover Capital.
Austin-based ScaleFactor is among the spate of companies trying to augment traditional service businesses, such as accounting firms and law firms, with artificial intelligence and machine learning technology. ScaleFactor’s program syncs up with online bookkeeping software like QuickBooks, and the company says its machine learning algorithms can better digest and account for businesses’ finances. The company says its software can also better help a business forecast and budget, pay bills and send invoices, and comply with tax and other business requirements. ScaleFactor can work with customers that don’t already have accounting software, too, says CEO Kurt Rathmann.
Other startups have been applying machine learning-like programming to accounting, including New Zealand-based Xero and Germany-based Smacc. The same goes for other sectors that offer sometimes arduous work with data or document processing, such as the legal industry. Indian startup CaseMine automates legal research tasks, while San Francisco-based Atrium LTS tries to improve the speed that corporate legal services are delivered.
ScaleFactor believes it stands out from other services because it offers a full hub of financial services for small businesses, and is based and operated in the U.S., Rathmann wrote in an e-mail.
Machine learning and artificial intelligence technology will, for now, operate as a complement to traditional accountants and lawyers, Xero argued in a blog post earlier this year. AI might be able to apply insights, but it won’t be able to think like a human or offer the emotional intelligence a human can, the company wrote in the blog post.
