Cedaris

Levi Morehouse started his first business at 20 and later earned his CPA. Around 2008, while working in small business and at a larger CPA firm, he saw a consistent gap: small businesses lacked useful, accurate, up-to-date financial information. Tools existed that could help, but they required the owner's time or someone else's time to keep the books accurate. Despite a difficult economy for starting a business, he founded Cedaris that year to automate accounting and bookkeeping for small business owners and to deliver financial dashboards they could act on.

Cedaris did not begin as software. From 2008 through 2014 it was an outsourced service business, bootstrapped with no outside capital. Levi took a roughly 70 percent pay cut in the first year, and the company grew to seven figures in revenue on its service model. In 2015 the company switched to a SaaS model, which Levi says was necessary to grow at the rate he wanted. He describes the sequence as the pattern of many successful founders: working through an agency or service model, seeing the same problem across many clients, and then building software once product-market fit is clear.

The company's growth relied on a mix of in-person and inside sales. Because it serves small businesses exclusively, flying to meet a single customer made no sense, but flying to meet a group of prospects in one place did. Levi said that model worked well, and inside sales converted well after those introductions. Acquisition costs stayed low during the bootstrapped years, historically a couple thousand dollars up to about three thousand per customer. Levi set a rule of keeping customer acquisition cost below one year of annual contract value, which averaged around $13,000.

The monthly recurring model was built around an all-inclusive fee with no billing by the hour, which kept the offering simple. Churn was the standout metric: Levi said net revenue churn was negative and gross monthly churn was well under 1 percent, with only a handful of customers lost in 18 months. Growth expansion came from customers adding locations or units as their businesses grew. The company also acknowledged that it had not yet built out value-based pricing axes beyond locations, preferring to keep pricing simple until it reached more scale. Cash flow was a constraint, since customers paid month to month with nothing up front, which is part of why Levi raised capital.

By September 2016 Cedaris had about 280 customers, $280K in MRR, and was growing at close to 10 percent month over month. Its 2015 revenue was $2.2 million, and the company had about 30 employees. It closed a $4.2 million Series A led by Tech Operators in May 2016. Levi said he was open to an IPO, an acquisition, or running the company privately for a long time, with the goal of reaching real scale.