When Mike Whitmire co-founded accounting workflow automation platform FloQast Inc.
in 2013, he wanted to address and streamline
the pain points of business accounting work that he had experienced firsthand.
The Sherman Oaks-based company has since grown to serve about 2,800 clients and recently reported a post-money valuation north of $1.6 billion. FloQast closed a $100 million series E round this month and is now charging towards an initial public offering.
When managing financial operations at a business, an accountant must handle tasks such as month-end closes, compliance and risk management, daily processing treasury, procurement, reporting and balance sheet reconciliation. FloQast’s tools include a collaboration workflow software platform that supports processes such as month-end close and reconciliation automation, reporting and compliance management, as well as free professional education and development courses.
Its products are used by public and private clients, including Twilio Inc., the Los Angeles Lakers, Shopify Inc., the Golden State Warriors, Docusign Inc. and Snowflake Inc. The platform is offered on a SaaS model which is priced based on a clients’ company and team size. Additional revenue for FloQast comes from implementation-related service fees.
Background in accounting
As a licensed certified public accountant, Whitmire previously spent three years as a senior accountant at Santa Monica-based software provider Cornerstone OnDemand Inc. While there, he worked extensively on Cornerstone’s IPO in 2011, which he said was executed in a 12-month period. Cornerstone later went private in 2021 through a reported $5.2 billion acquisition by Santa Monica-based Clearlake Capital Group.
Whitmire said that his time with Cornerstone allowed him to learn about how a sales department interacts with customers, the go-to-market side of a business, how a SaaS company operates and the best operational times to hire new staff.
“For those not in the accounting world, I would just stress (12 months) is a psychotic timeframe to try to go … from zero to IPO,” Whitmire said. “But I got to learn so much about everything that we had going on in my time at Cornerstone, and I really heavily attribute that to the success of FloQast. Not just the product, (but also) the collaboration workflow and, on the nerdier side, the tie-out and reconciliation process automation.”
He later co-founded FloQast with Chris Sluty and Cullen Zandstra, who now respectively serve as chief product officer and chief technology officer. The platform originally focused on integrating with Excel and streamlining “pain points” within that software. It has evolved to offer broad integrations from Excel and cloud storage to enterprise resource planning and bank integrations. Whitmire said FloQast’s internal mantra is to go down the balance sheet and automate as much as possible, including workflows, reconciliation, audit request lists and compliance.
“There’s a massive talent crunch inside of audit, so anything we can do to automate the mundane work between the auditors and the accountants, I think, is a really big value add,” Whitmire said. “That has certainly landed with our customers and our prospects, and that product is doing extremely well.”
FloQast later noticed that some clients – such as Zoom Video Communications Inc. – were using its software for unintended purposes, such as managing payroll processing and other non-close related workflows. FloQast decided to pivot its platform to accommodate this unexpected user activity. In late 2020, it began to roll out a tool called FloQast Ops. This allows users to view the status of all accounting operations, including accounts payable, payroll and Securities and Exchange Commission reporting, from one dashboard.
‘Customers aren’t just helped, they’re deeply understood’
FloQast’s post-money valuation has grown 33% since a 2021 valuation of $1.2 billion, and it announced $100 million of annual recurring revenue earlier this year. Whitmire repeatedly referred to his focuses and forward-looking missions at FloQast as “maniacal.” However, the growth tactics and manners of operation that he describes are metered and intentional: for example, the company hires carefully, has maintained a steady rate of growth and has a “strong culture” of internal promotions. Whitmire said that these strategies helped FloQast to avoid implementing any layoffs in the last few years. Its team size has still grown considerably in the last decade – FloQast’s current headcount is 649, up from 40 in 2017.
“On the one hand, yeah, I would love to grow 300% one of these years, but (our current growth) makes the business way more predictable and allows us to not get out in front of our skis with hiring,” Whitmire said. “We’ve been able to preserve cash and really be smart about things.”
One unique strategy that FloQast has stuck to is hiring accountants into customer-facing roles – 35% of its employees are former accountants, and all its sales engineers and implementation team members are trained accountants. FloQast promotes its platform as technology that is built “by accountants, for accountants,” and it said that hiring accountants themselves has been an “important metric” for its success.
“FloQast capitalizes on accounting institutional knowledge and it’s been a driving force in our competitive differentiation,” Whitmire said. “Customers aren’t just helped, they’re deeply understood … most of the pain points (that) customers experience or look to solve are ones our team has experienced firsthand.”
Whitmire said investors initially pushed back against the strategy, calling it a decade-long “battle” that he personally fought for.
“There was one board meeting where I presented these statistics around the success rate of sales executives that we hired who did not have a background in accounting, versus those that we promoted and did have a background in accounting,” Whitmire said. “The analysis I put together was so damning that we agreed that we should not be hiring externally, we should be promoting internally.”
Planning to go public
The company’s previous fundraises include a $110 million series D funding round in 2021 and a $40 million series C round in 2020, on top of its 2013 participation in the Venice-based Amplify.LA accelerator program. Whitmire said that most of FloQast’s recent funding will go towards laying the “groundwork” to become a publicly-traded company, as well as to support international expansion and product development.
While an IPO has been a dream for Whitmire since high school, he said that FloQast is still a “couple years out” from that. He added that FloQast intends for the recent series E funding to be its final investment round before heading into an IPO.
“I would like to be able to grow the revenue number, land in more geographies, expand up market (and) build more of our solutions before we head into that IPO,” Whitmire said. “(Once) the foundation for the business is in that situation, then we’ll be ready to operate like a public company and really focus on consistent growth, earnings before interest, taxes, depreciation and amortization, margins and all that good stuff. There’s still some more groundwork to be laid with venture capital money that’s a little more open to those types of investments.”