For today’s profile I’m joined by Ed Molyneux of FreeAgent.
FreeAgent is an award-winning cloud accounting software for freelancers, contractors, micro-businesses and their accountants.
Our questions are in bold.
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Who are you and what’s your background?
I’m Ed and I’m the CEO and the co-founder of FreeAgent. I spent a decade flying military fast jets for the RAF after leaving Oxford University, before settling into the somewhat less glamorous world of freelance IT consultancy.
Not long after embarking on this new career path, I met a couple of fellow freelancers – Roan and Olly – who shared my dislike of using spreadsheets to manage their finances and the fact that there was no dedicated software available for our types of businesses. We decided to create something that could help ease the pain and this led to the launch of FreeAgent in 2007.
What is your job title and what are your general responsibilities?
I’m FreeAgent’s CEO, which means I’ve got a strategic overview over the whole business – and that’s a role that has been constantly evolving over the past nine years.
When we first started FreeAgent I was very closely involved with everything from designing new features, writing code, taking calls from customers and promoting the product – right through to managing the financial side of the business. But the challenge for me now is keeping my CEO hat on and concentrating on the high level decision-making and running of FreeAgent, rather than each individual area. It’s been tough to take a step back and delegate responsibilities, but we have a host of brilliant people who I trust to manage these parts of the business, so that’s made it a lot easier!
Can you give us an overview of your business?
We provide cloud accounting software specifically for freelancers, contractors and micro-businesses – as well as the accountants who work with them.
FreeAgent helps people take care of their businesses’ day-to-day financial admin – from managing expenses, running a fully RTI-compliant payroll and tracking time, through to creating and sending professional-looking estimates and invoices to clients. It also helps them keep track of their cash-flow, see how much tax they owe and when it’s due, and file VAT, RTI and Self Assessment returns directly to HMRC.
Our mission is to make people feel in control of their day-to-day business accounts, relax about tax and work more effectively with their accountants.
Tell us how you are funded.
My co-founders and I ‘bootstrapped’ the company for the first couple of years, working without pay and in our spare time. Luckily Olly and I were working on fairly well-paying freelance contracts at the time and Roan worked full-time in the daytime as well as working on FreeAgent at night – but the credit cards took a pretty serious battering back then.
We raised two rounds of seed funding in 2009, enough for us to work full-time on the business and since then we have gone on to raise over £8m – including our first ever crowdfunding campaign last year which closed after exceeding our £1m target.
Why did you start the company? To solve what problems?
To help people. When the three of us were freelancing, we hated using spreadsheets to say on top of our business books and we couldn’t believe that no-one had made any software to help make this process easier. After all, no-one starts their own business just to spend hours wrestling with numbers and admin.
We thought that freelancers and micro-business owners could really benefit from having software that was specifically-designed for them and helped make things like bookkeeping, tax and invoicing easier. We wanted to give people a way to see all of their financial information in one place and immediately have visibility over how much they were earning, how much tax they needed to pay, and which customers they needed to chase for payment.
We also thought that such a system would be great for accountants who work with small businesses too, as it would enable them to minimise the amount of basic admin that they had to perform, work more effectively with clients and provide deeper insights into their business finances.
Who are your target customers? What’s your revenue model?
Freelancers, contractors and micro-businesses – basically anyone who runs a small business with fewer than 10 employees. Those are the kind of people who have been generally overlooked by traditional accounting software.
We also work closely with many leading accountancy practices who provide FreeAgent to their clients as part of their service. This enables accountants to work closer and more effectively with their smaller clients and help them to run better businesses.
Our revenue model is simple. We sell directly to clients as a monthly subscription, and our prices are based upon what kind of business they operate (i.e., sole trader, partnership or Limited company). We also operate a successful referral scheme where we give a 10% discount to customers for every person they introduce to FreeAgent who goes on to become a subscriber. These discounts are then active for as long as the new customer subscribes with us.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
The willingness of banks to lend money to small businesses. It’s a major blocker for many great, innovative small business owners who want to grow their ventures. And although we’re seeing alternative finance sources becoming increasingly popular – such as crowdfunding, peer-to-peer lending and angel investment – a loosening of restrictions for bank loans could revolutionise the UK’s micro-business sector and help uncover the major companies of tomorrow.
I also wish that more banks would be open to the idea of integrating with software providers. One of the biggest things that our customers say helps them when it comes to managing their business finances is having a direct feed from their bank into FreeAgent – and we would love to be able to provide that functionality across a range of business bank accounts. But despite the high demand, there is still a lot of trepidation among major banks to actually consider this.
What is your message for the larger players in the Finance industry?
Don’t dismiss new ideas or opportunities to work with new technology. There are a great many software companies out there who have the potential to be real game-changers for the finance industry. Just keep an open mind and look at what the benefits could be if you started working together.
What phone are you carrying and why?
An iPhone 6. We’re a company that utilises a lot of Apple tech – and a large proportion of our customers are Apple users too – so that’s my platform of choice.
Where do you get your industry news from?
For accounting industry news I closely follow AccountingWeb. For more general tech industry news I let Twitter let me know what I should pick up on!
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
I don’t have anyone specifically in the FinTech field, but @jasonlk, @BenedictEvans and @BostonVC are must-follows for all tech entrepreneurs
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Robin Klein (@robinklein)
What’s the best FinTech product or service you’ve seen recently?
I’m a big fan of GoHenry (www.gohenry.co.uk) – a pocket-money management app for kids. I have a 12-year-old and an 8-year-old and it’s really helped them take responsibility for their pocket money and their spending. They even get a debit card they can use in shops and online. I’m hoping that services like that will mean this generation will grow up with a much better financial education than I did.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
It’s all about data. Everyone’s rightly very protective about their privacy, but there are occasions where being prepared to share some specific numbers can be helpful. For example, we think a lot about how hard it is for very small businesses to access financing. But by sharing some key accounting figures in real-time, finance providers could understand how healthy the business was and be a lot more likely to provide finance at competitive rates. Our economy as a whole would benefit hugely from the resulting growth.
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