FreeAgent embarking on drive to raise £5m funds

Xero collaborator Float, based at Edinburgh's CodeBase technology incubator, which was last month named 'emerging add-on partner of the year' at Xero's annual conference in Sydney. Picture: Contributed

Xero collaborator Float, based at Edinburgh's CodeBase technology incubator, which was last month named 'emerging add-on partner of the year' at Xero's annual conference in Sydney. Picture: Contributed

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ONLINE accounting software specialist FreeAgent is embarking on a multi-million pound fundraising drive amid growing interest in the cloud computing arena.

The Edinburgh-based firm, which targets small businesses and freelancers, has raised about £5 million in external investment since it was founded in 2007, and chief executive Ed Molyneux told Scotland on Sunday that he was aiming to secure a similar amount “within the next 12 months”.

FreeAgent’s plans come after accounting software giant Sage last week agreed a £97m deal to buy PayChoice, a US-based provider of payroll services for small firms, as it seeks to accelerate its “move to the cloud”, whereby customers can manage their books over the internet using both mobile and web-based applications.

Sage’s efforts to build its presence in the cloud follow the success of firms such as FreeAgent and rival Xero, which was founded in New Zealand eight years ago.

Gary Turner, UK managing director at Xero, said small businesses have generally not been well served by accounting technology in the past, but the group has more than 350 “add-on partners” developing online applications that can connect with its systems.

One such partner is Receipt Bank, which extracts data from bills, receipts and invoices so it can be published directly into software packages.

Xero launched in the UK in 2008 and Glasgow-born Turner, a former product group director at Microsoft, joined the following year. Sales at the firm, which has about 300,000 customers around the world, almost doubled to NZ$70.1m (£34m) in the year to March and the UK accounts for 15 per cent of monthly revenues.

Another Xero collaborator is Float, based at Edinburgh’s CodeBase technology incubator, which was last month named “emerging add-on partner of the year” at Xero’s annual conference in Sydney.

Float chief executive Colin Hewitt said: “From our point of view, it’s good to see Sage investing in the cloud. Payroll is a really big headache for a lot of small businesses.”

Hewitt said that Float, which also partners with FreeAgent and has about 500 paying customers, is about to push the button on its own efforts to raise up to £500,000 from angel investors to help ramp up development and marketing.

The firm has a five-strong team, compared with about 70 people at FreeAgent, where Molyneux said he wants to double its number of employees over the next three to four years.

He added: “Many companies are very aggressive in their growth, and I’m sure that’s right for them, but we’re a bit more measured. We’re continually hiring across the board.”

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