Prosaic has drawn four local backers:
- Vaughan Fergusson - founder of point-of-sale software maker Vend, sold to the NYSE-listed Lightspeed for $455 million in 2021.
- Ryan Baker, founder of salon booking software firm Timely, sold to the Denver-based, Silver Lake-backed EverCommerce for $135m in the same year.
- Paul Grey, co-founder of Peace Software, aimed at utilities, which was sold to a US power company in 2006 for $115m, before becoming a Serato director and going on to found A2X, which posts Shopify, Amazon and other online sales data directly into Xero and other accounting systems; and
- Rowan Simpson, the former Trade Me head of product and Xero head of strategy who was also chairman and an investor in Vend, and an investor and director of Timely.
There are also two overseas investors:
- Jamie McDonald, the Canadian whose document collaboration startup Hubdoc was sold to Xero for US$70m in 2018, who now serves as the CEO of A2X; and
- Michael Wood, the UK founder of Dext (formerly Receipt Bank), one of the first apps to appear on Xero’s app store, used by more than 10,000 accountants and bookkeepers and more than 1 million end-users - and more recently founder of Translucent, which turned existing software into a multi-entry solution.
Prosaic’s founders already know their way around start-ups. The pair met while working at Vend, where Houldsworth was chief marketing officer and Oulton lead engineer.
Houldsworth went on to become Xero’s executive general manager of ecosystems (a position that brought him into contact with Wood and McDonald), before becoming involved with multiple startups as an investor and director, while Oulton did a tour of duty at fast-growing Slack.
Xero integration
Houldsworth says Prosaic, aimed at accountants, small businesses and sole traders connects to personal bank, card, and mortgage accounts, using AI to find and code business expenses like home office and motor vehicle automatically. Expenses can now be instantly shared with Xero, thanks to recently introduced direct integration - introduced just last week - or directly with your accountant to claim tax deductions and complete GST returns.
“We don’t yet have a native or direct integration with Hnry, but we’ve developed a way to post expenses into Hnry via Zapier,” Houldsworth said. That involves a couple of extra hops after installing the Zapier app.
Eyes on open banking
Like a host of other fintech firms, Prosaic is keen on open banking - or a series of reforms that will allow third parties to directly access your banking data. Houldsworth says read-only access will be more streamlined and secure.
Today, thanks to “banks dragging the chain” on open banking, as Herald financial columnist Diana Clement put it, various apps have to use so-called screen scraping services as a workaround. Open banking should open the door to making things easier for apps, allowing them to add new features.
Egged on by Commerce and Consumer Affairs Minister Andrew Bayly, the major banks implemented a series of technical and policy reforms in March to help smooth the way towards open banking. Open banking proper should begin after further work due to wrap up at the end of November (with the exception of Kiwibank, which is on a two-year delay).
The process is underpinned by the Customer and Product Data Bill, driven by Bayly and introduced to Parliament in May. Once passed the legislation will allow consumer and small business customers to require entities holding their data - such as a bank - to share that information with certain third-party service providers, such as fintech apps.
But some of the “when” and the “how” is still down to industry self-regulation. Houldsworth says he’d prefer everything to be mandated, as in the UK and Australia, which are ahead of NZ on open banking. Bayly has said he’ll weigh options for further regulation if banks don’t hit their November milestone.
The major banks, which are co-ordinating their open banking reforms through Payments NZ’s API Council, say it’s complex work meshing different systems, and that to rush the process could compromise security.
“[Open banking] has really progressed in the UK and Australia,” Houldsworth says. “In some ways we’ve chosen the hardest market to start in, because New Zealand is the furthest behind.”
It’s a tough time for early-stage firms, with the venture capital industry laid low by high interest rates, and many sole traders averse to buying new software in the midst of an economic slowdown. To boot, new Technology Minister Judith Collins axed funding for the $11m KiwiSaaS programme designed to help cloud software startups like Prosaic, and has cut back Callaghan and (like the Labour-led Government before her) declined to top up the now exhausted $300m, Crown-backed Elevate venture capital fund.
Houldsworth is unfazed. “A recession can be a great time to found a startup,” he says.
Markets are primed for disruption, and Prosaic hopes to lure those doing it tough with the promise that its existing clients are finding an extra $150 per month in savings.
And at the end of the day, the regulatory and political landscape in NZ is by-the-by. Prosaic plans to make most of its money offshore, all going to plan.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
