Wave Accounting Raises $12M

Simply put, Wave is on a roll.

The online accounting service unveiled a $12-million series B financing round that includes The Social+Capital Partnership, as well as existing investors Charles River Ventures and OMERS. The deal takes place only eight months after the Toronto-based company raised $5-million

In a blog post, Wave CEO Kirk Simpson said: “We’re very proud of what we’ve accomplished at Wave since we launched at the end of 2010. We’ve had nearly a quarter of a million small businesses sign up, with tens of thousands of new businesses joining every month. But our goals are even bigger than this. There are even more features in Wave Accounting and Wave Payroll that we plan on developing, as well as other complementary tools we intend to release.”

Wave’s rise is impressive given how quickly the service has been embraced and the number of users it has attracted. The company was one of my first start-up consulting clients, and Simpson and I had lively discussions over Wave’s business model, its messaging and how it was going to be positioned in a competitive marketplace.

In hindsight, Wave has succeeded because it hit the market with a compelling and disruptive service – free online accounting – that resonated with small business owners looking for an alternative to Quicken or Excel spreadsheets. While I wasn’t a big fan of free, Simpson believed that Wave could monetize user’s data to create a viable business model.

The company’s ability to raise $18.5-million in financing, which includes an original seed round, is significant because it demonstrates that Canadian start-ups can attract the growth capital that is required to become a major player or, at least, drive to become a major player.

OMERS’ ability to provide and participate in series A and B round can’t be under-estimated given this is where the Canadian venture capital ecosystem needs to become more robust.