Found — serving financial superpowers to the self-employed.
Announcing Lightspeed’s Series B investment in Found, a modern financial platform for self-employed workers.
Self-employed business owners, taken in aggregate, form the largest single segment of US workers. The 10 million self-employed Americans who work full-time are equivalent in number to the top 3 most common American jobs — retail sales, fast food counter worker, cashier — combined. While the most common traditional jobs tend to be the lowest paid, self-employed workers regularly earn twice the national annual median income. Some of the highest paying job categories, like professional services, are already majority self-employed. Moreover, if we include “gig economy” and part-time work, the number of self-employed swells to 60 million Americans, with over half of millennials participating.
Self-employed work is, therefore, far more prevalent and important to the US economy than many realize. Technology has made it easier than ever to start a business. Stripe has a complete set of tools for incorporation. Carta* lets you manage your cap table. Rippling helps you set up payroll and benefits. You can design your logo in Canva Team, set up your website in Wix, accept credit/debit with Square, and buy your inventory with Faire team.* Most of these tools are net new within the last decade.
In addition, the COVID-19 pandemic has fostered a surge in new business formation in categories that skew heavily towards self-employment. For example, professional services, in which new business formation grew at a steady 2–3% CAGR for over a decade, suddenly hit a new monthly plateau in mid-2021. The implied growth, from ~38K/month to ~52K/month, is equivalent to roughly 12 years of growth at the old CAGR!
Self-employed workers earn aggregate annual wages of over $1 trillion and spend a similar amount of money each year. Critical business functions like bookkeeping and invoicing are often left to the business owner to figure out herself. Tax is especially tricky. Sole proprietors are often Schedule C filers. They pay taxes on a quarterly basis and, while they can deduct most business expenses, many fail to do so because it’s inconvenient and hard to track.
An ecosystem of accountants, bookkeepers, and lawyers (often themselves self-employed business owners!) have risen to fill in the gap. But, the costs add up. In aggregate, Intuit pegs its core consumer+SMB segment at $46 billion of demand for tax and financial management software. That’s excluding the amount paid to humans to manage all these books.
Enter Found: a single, automated platform for self-employed business owners perform these critical business tasks. After spending nearly a decade in various product leadership roles at Square, CEO/co-founder Lauren Myrick realized she could solve all these problems simultaneously by building a software-driven bank focused on this class of worker. With knowledge of an employer’s income (through invoices and deposits) and tax deductible expenses (through a corporate debit card), she could design software that would automatically do bookkeeping and provision a tax savings account to make sure the business owner had enough saved away at the end of the quarter. Moreover, she realized that innovation in the banking stack had only recently allowed such company would be possible to be built independently.
Lauren and her co-founder Connor Dunn, also from Square, have built one of the best teams we’ve met in payments or SMB tech. We got to know Lauren through her former Square colleagues Amir Nathoo and Max Rhodes and have been blown away by Found’s progress in the last year. With more than 20x growth its customer base, Found is well on its way to helping millions of self-employed workers spend more time on their businesses and less time on financial administration.
Lightspeed is delighted to back the Found team in its $60M Series B financing, alongside our friends Keith Rabois at Founders Fund and Alfred Lin at Sequoia, as well as some amazing angels from the fintech and marketplace ecosystem.
And, of course, Found is hiring! If you’re interested, ping me on Twitter or check out the company’s careers page below:
Alex Taussig is a Partner at Lightspeed in Silicon Valley, a global venture capital firm with over $10B under management. He invests predominately in online marketplaces and is responsible for the Lightspeed’s investments in All Day Kitchens, Archive, Daily Harvest, Faire, Flockjay, Found, Frubana, Outschool, Zola, and more. At his prior firm, Alex was involved with foundational investments in 2U ($TWOU) and thredUP ($TDUP), among others. Alex publishes a weekly(ish) newsletter called “Drinking from the Firehose”, where he shares insights on commerce, media, technology, science, pop culture and more.
