What do you do when you lose your job, through no fault of your own, but because the world has gone into meltdown? Well, for a certain slice of New Zealanders, the answer seems to be that you create your own job.
Hnry - a maker of pay-as-you-go accounting and tax software for sole traders - has raised $35 million, defying the venture capital drought.
The Wellington-based firm says the money will be used to more than double its headcount over the next six months. It currently has 55 staff in Wellington,where it was founded. Next month it will open a Sydney office with 25 to 30 staff, and continue hiring on both sides of the Tasman.
Co-founder James Fuller tells the Herald more CVs are coming in than six months ago, amid a tech job market on the turn.
His firm, which charges $1 on every $100 earned, has global ambitions, but Fuller says the $35m will be spent expanding in Australasia. Although it will stay in the same geography, new products and services will be added.
The raise was led by Aussie VC firm AirTree - an early backer of Canva. It was supported by a second Aussie venture capital outfit, Athletic Ventures (formed by a clutch of ex-sports stars, including cricketer Mitchell Starc and Wallabies captain Michael Hooper), US firm Left Lane Capital and NZ’s Icehouse Ventures.
Airtree Ventures partner Jackie Vullinghs (left) with Hnry cofounders James and Claire Fuller. Photo / Supplied
The money was raised during the second half of 2022, a time when the venture capital boom had turned to bust amid rising rates, recession fears, tech stocks sinking and a rash of down-rounds (companies raising money at lower valuations than previous raises) and devaluations (Canva, for example, saw its private equity valuation slashed by a third), and the Crown-backed NZ Growth Capital Partners nearly exhausting its $300m Elevate Fund, with no word on whether the Government will put in new money (or, indeed, the final $30m of its originally promised allocation).
Bucking the trend
How tricky was it to raise funds in the new normal?
“Three or for years ago, investors were looking for growth at all costs. Now it’s more about efficiency, margin and path-to-profitability - and ever since we started, the business we’ve been focused on those things,” Fuller said.
Did investors drive a harder bargain this time around though? It’s not immediately clear. When Hnry staged its Series A raise in early 2022, it was at a $100m valuation. This time around, Fuller refuses to give a post-money number.
Recession plays to strengths
The cofounder does say his firm is growing strongly and now has “tens of thousands” of customers in Australia and NZ, but won’t give any financials. He said the firm is “not far away” from profit.
Fuller says he’s not daunted by the faltering economy, which he frames as playing to Hnry’s strengths.
“When things slow down, individuals look to take more control over how they earn,” he said.
“We saw this during Covid. People saw they were only one restructure away from having to fend for themselves, so they went out and worked for themselves, for multiple people to spread the risk.”
Fuller says he’s not daunted by the faltering economy, which he frames as playing to Hnry’s strengths.
“When things slow down, individuals look to take more control over how they earn,” he said.
“We saw this during Covid. People saw they were only one restructure away from having to fend for themselves, so they went out and worked for themselves, for multiple people to spread the risk.”
Working as a contractor in NZ, he found he had an admin-heavy, advice-light relationship with his accountant.
The Fullers founded what they bill as the world’s first pay-as-you-go accounting service for the self-employed - Hnry, which charges $1 for every $100 you earn, up to a cap of $1500 in fees per year.
For your money, you get software that automates your taxes if you’re a contractor, freelancer or consultant. It also helps with generating invoices and tracking expenses, and there’s a promise of unlimited support. The firm also offers accounting advice. Fuller pitches it as cheaper than using accounting software plus your own accountant.
AirTree partner Jackie Vullinghs said investing in the Series B round builds on her firm’s existing relationship with Hnry.
“Figuring out how much tax to pay as a sole trader is stressful, and Hnry removes that pain entirely. We look to invest in products customers love to use, and Hnry’s customers constantly express their love across social media, in surveys, and through their engagement with the product.”
Including a series of seed rounds (this is Icehouse’s fifth investment), Hnry has now raised a total of $60m, Fuller said.
According to a January 30 Companies Office update, Australian venture capital firm EVP (a supporter of Hnry’s Series A raise) is the largest single shareholder with a 24.4 per cent stake, followed by the Fullers (24.0 per cent), Left Lane (18.6 per cent), AirTree (11 per cent) and Icehouse (5.3 per cent).
