Embedded finance is usually what we hear when brands and non-financial businesses want to offer financial products or services—such as banking, insurance, lending, and payments—to provide a better user experience for customers.
Layer leans towards that better user experience, but with built-in accounting. Its customers are those, like Square or Toast, that work with small and medium-sized businesses to offer accounting and bookkeeping capabilities in their own products. These larger companies will integrate Layer’s tools into their platform for use by small businesses.
SMBs can now access accounting and bookkeeping tools within the Square or Toast platforms they use to run their business. This is instead of using a separate accounting software such as QuickBooks to manage their business finances.
Justin Meretab, a former product leader on Square’s Banking team, started San Francisco-based Layer in 2023 with Daniel O’Neel, a former engineering leader at Wealthfront. Their goal was to create a set of APIs that would allow platform customers to pass data from their small business customers to Layer. Layer then provides connections to external bank and credit card accounts to pull the data and feed it into Layer’s ledger and account system. This allows small businesses to create a complete picture of all their financial data.
In a way, Layer is like Unit or Check, but for SMB accounting instead of banking and payroll. In fact, the company aims to completely replace legacy accounting and bookkeeping platforms like QuickBooks, Meretab told TechCrunch.
So were investors laughed out of the room when they explained how they wanted to replace QuickBooks? About.
“Many investors we spoke to told us this is a lofty goal, given how much QuickBooks currently dominates the SMB accounting market,” said Meretab. “However, they also agree with our core belief that there has been a fundamental shift in the way SMBs run their businesses that now makes it possible to disrupt the QuickBooks moat.”
Meretab went on to explain that in recent years, platforms like Square, Toast and Shopify have become the hubs where SMBs run their businesses. These platforms have built deep relationships with these customers and hence, are increasingly helping them manage all their day-to-day operations.
Meretab has been with Square for six years and heard from customers that they wanted to do their accounting directly on those platforms instead of separate tools. He and O’Neel talked to potential clients and learned that it would be difficult to build this kind of integrated accounting function in-house, so they did it.
The mattress is not only here. There are some companies that do integrated accounting for small and medium businesses, such as Hurdlr and Fiskl. However, Meretab said Layer differentiates itself by focusing on creating complete accounting products without making clients do a lot of work themselves or without even having to understand how accounting works.
The company has a small set of early customers, four in fact, that have released their own SMB accounting products integrated into their platforms. Customers serve a wide range of SMB industries, from truck drivers to medical spas, and collectively work with more than 100,000 small businesses.
“One surprise was that many SMB users tell us that our integrated accounting views are actually the first time they’ve ever seen a clear picture of their business’s profit and loss,” said Meretab. “Many tried to use separate accounting software but found it too complex or difficult to sync with their main operating software.”
Layer’s different approach has also attracted investors. Better Tomorrow Ventures led a $2.3 million seed investment in the company and with it a team of executives at companies including Square, Plaid, Unit and Check.
The company plans to deploy the new funding to expand its services to additional small business software platforms this year. It will also expand its team of four in engineering and business operations roles.
“During this year, our goal is to significantly increase customers, such as tripling the number of customers, and increase revenue,” said Meretab.
