Sleek’s $270m software empire built as a ‘no-frills’ Xero competitor

Sleek, the company behind what it claims is an ‘operating system for small businesses’, has raised $38.5m as it targets giants Xero and DocuSign with its no-frills products.

Sleek founders Adrien Barthel (left) and Julien Labruyere have built a $270m company by creating software to simply back office tasks for small businesses.

A company which has created the “operating system for small businesses” has raised $US25m ($38.5m) as it targets Xero and DocuSign with no-frills products.

Sleek is now valued at $US150-175m ($230-$270m) after its Series B raising.

Ellerston JAADE Private Assets and Tokyo-listed Money Forward led the raise for the Singapore-based company, which was born out of the frustration many small businesses face: administration and compliance.

Julien Labruyere founded the company in 2017 with Adrien Barthel, initially using DocuSign and Dropbox, before building their own products.

“Before I started Sleek I had a start-up in Singapore and I was extremely frustrated with everything related to my back office, you know, compliance in general,” Mr Labruyere said.

“I had 30 to 40 shareholders all over the world in that start-up and that was back in the early 2010s. I could not get a simple board resolution signed with DocuSign; that was before it was mainstream.

“I had to circulate via DHL hundreds of thousands of kilometres around the world for very simple things like changing a registered office address.

“So I wanted to do something about it. I started Sleek in 2017 coming from my personal pain. We were essentially using DocuSign and Dropbox, so no product of our own. And we reached a few million in revenue just organically within a couple of years.”

As Sleek signed on new customers it found DocuSign was becoming too expensive, so it began building its own products. It then expanded into accounting, doing the same.

“We started on the back of Xero which was launching in Asia; great product. And at some point in 2021, I think we realised, it was costing us a lot of money and do our clients really like Xero? And actually, they don’t really like Xero.

“They pay us to not have to deal with Xero.

“They want a service and they want to have peace of mind. They don’t want to have more stress by having to look at accounting software, which for the average small business owner is just a pain. And so we built our own on the back of an open-source accounting ledger.

“Moving from Xero to our own software saved us 20 per cent of gross margin straight away.”

During the past five years, compound annual recurring revenue has surged 63 per cent and gross profit growth has jumped more than 100 per cent.

Ellerston JAADE Private Assets investment director Justin Diddams.

Mr Labruyere said his products were not designed to emulate all of Xero’s or DocuSign’s features, but instead provide businesses with the basic necessities they needed to run their operations.

“Our accounting software is not as sophisticated as Xero. Our DocuSign, which we call SleekSign, is not as elaborate as DocuSign. But it does the job if have zero to 20 employees,” he said.

“We strip down all the nice to have in the bells and whistles and just focus on getting something that works and is easy to use.”

Sleek now operates in Australia, Hong Kong, the UK and Singapore, serving more than 15,000 companies. Mr Labruyere said its profit margins were 60 to 70 per cent, depending on the market and it would harness artificial intelligence to get to more than 80 per cent.

It has introduced small-language models to bookkeeping, which “beats a human by quite a margin”, and is using AI to better gauge client sentiment to improve its products.

“We’re excited about the fund raise because it’s going to lift a lot of our frustration in terms of our road map and compress maybe three years’ work into 18 months,” Mr Labruyere said.

“We have sufficient cash in the bank to not have had to raise but we found that Ellerston was a good partner because we are pretty bullish in Australia … and they understand the space and love the space, and we want to accelerate.”

Ellerston JAADE Private Assets investment director Justin Diddams will join Sleek’s board to aid its development and introduce it to the fund’s other portfolio companies.

“We felt like there was a good meeting of the minds with the founders around what they were trying to achieve. A number of the Ellerston portfolio companies interact with small businesses. If you think about Mable, with its carers; Hipages, with its tradies. We understood the business model immediately,” Mr Diddams said.

“One of the things that really attracted us to Sleek was their exposure to AI tailwinds, with their AI offering providing genuine improvements across both the business internally via cost efficiencies but also improve outcomes for their clients. We view this as a real differentiation in the market.”

Mr Diddams said Sleek building its own accounting ledger, called Sleek Books, also generated a “huge amount of data”.

“Matching this with their customer interactions via emails and phone calls and all the external tax legislation and accounting policies, this gives them a powerful source of data to build out their AI models and offer this functionality into their platform.

“We see Sleek being very disruptive to the accounting services market because of their ability to leverage AI and deliver improved accuracy and client outcomes across their accounting and tax compliance work.”

Originally published as Sleek’s $270m software empire built as a ‘no-frills’ Xero competitor