A clearer image of Bench’s downfall is rising because of newly-released chapter filings.
The information present that the Canada-based startup, which mockingly sufficient supplied cloud accounting software program for small companies, persistently struggled to achieve profitability. It burned by way of $135 million from its founding in 2012 to September 2024.
By the point of its collapse, Bench was compelled to close down resulting from a “liquidity disaster,” the information say. Bench had $800,000 left in money in its Canadian account whereas a separate account for its U.S. entity had lower than $400,000.
Bench had been making some progress on slicing its burn lately, the filings present. Bettering funds was the primary mission of Bench’s second CEO, Bench’s former CFO who took over in 2022 and commenced conducting layoffs, in response to former workers.
For instance, Bench misplaced nearly $30 million on $42 million in income from March 2022 to March 2023. However Bench reduce its losses in half the following fiscal yr whereas rising income to $49 million.
However that wasn’t sufficient enchancment to cease Bench’s losses from accumulating. As the corporate struggled, in June 2024, Bench’s largest lender, the non-public Nationwide Financial institution of Canada, revamped $40 million in loans accessible to Bench, per the submitting.
That gave Bench a while to buy itself round for a sale, the duty of its third CEO. And NBC appeared on board: on December 12, 2024 – simply 13 days earlier than Bench’s collapse – NBC signed a brand new funding and forbearance settlement with Bench, the submitting says, which means it agreed to quickly pause or modify the startup’s mortgage reimbursement obligations.
The information don’t specify precisely why Bench shut down simply two weeks later. A financial institution – presumably NBC – known as in Bench’s enterprise debt, The Data reported. Newcomer reported that NBC declined to make different concessions as Bench was being shopped round.
NBC didn’t reply to a request for remark from TechCrunch. NBC is owed $51 million by Bench and this quantity is constant to accrue resulting from curiosity and different charges, the submitting notes.
Regardless, Bench is now on a brand new path after US-based Employer.com immediately introduced it deliberate on buying the startup simply 72 hours after its collapse. That course of relies on an settlement that “contemplates” a deadline of February 28, 2025, per the submitting.
Nonetheless, Bench’s chapter provides a window into the hazards of an excessive amount of debt for startups. And enterprise debt lenders will play an enormous function within the hearth gross sales and startup shutdowns which might be predicted to proceed at a quick clip this yr, specialists say.
