Layer’s unique approach has attracted investors, and with a recent $2.3 million pre-seed investment, aims to expands its workforce.
When non-financial companies and brands wish to offer financial services or products, such as lending, insurance, payments, and banking, in order to improve the user experience for their clients, they typically refer to embedded finance.
Layer is moving toward an enhanced user interface with integrated accounting. Its clients are companies that engage with small and medium-sized enterprises to provide accounting and bookkeeping services inside their own products, such as Toast or Square. These bigger organizations would allow small businesses to use Layer’s capabilities by integrating them into their platform.
SMBs can now access accounting and bookkeeping capabilities directly from the Square or Toast platforms they use to manage their businesses. This replaces managing their company’s money with a different accounting program, such as Quickbooks.
Justin Meretab, a former product leader on Square’s Banking team, and Daniel O’Neel, a former Wealthfront engineering executive, founded San Francisco-based Layer in 2023. Their objective was to develop a set of APIs that would enable platform users to provide Layer data from their small company clients. In order to gather data and transfer it into Layer’s ledger and account system, Layer then offers connections to outside bank accounts and credit card companies. This therefore enables small firms to compile all of their financial data into a comprehensive picture.
Layer is similar to Unit or Check, but specifically for SMB accounting as opposed to banks and payroll. According to Meretab, the company’s goal is to totally replace outdated bookkeeping and accounting software like Quickbooks.
Given how much Quickbooks presently controls the SMB accounting market, “many investors we’ve spoken with have told us this is a lofty goal,” Meretab added. But they also concur with our central thesis, which is that SMB operations have undergone a fundamental change that now makes it feasible to undermine Quickbooks’ competitive advantage.
Meretab continued by stating that platforms such as Square, Toast, and Shopify have emerged as the central focus for small and medium-sized business operations in recent years. These platforms have developed close bonds with those clients, and as a result, they are increasingly assisting them in running their entire business on a daily basis.
During her six years at Square, Meretab heard from clients who preferred to handle their accounting right within the platforms rather than using different solutions. After speaking with potential clients, he and O’Neel discovered that developing such an embedded accounting feature internally would be difficult, so they went ahead and implemented it.
Layer is not the only person in this situation. There are a few businesses, such as Hurdlr and Fiskl, that provide embedded accounting for SMBs. But according to Meretab, Layer sets itself apart by concentrating on creating complete accounting solutions that don’t require users to perform a lot of labor on their own or even comprehend how accounting functions.
Four of the company’s initial clients have developed their own SMB accounting products, which they have integrated into their platforms. Customers work with over 100,000 small businesses across a variety of SMB industries, including truck drivers and medical spas.
Many SMB users have surprised Meretab by telling her that their embedded accounting views are the first time they have ever seen a clear profit and loss view of their company. “Many tried using separate accounting software, but they found it difficult to maintain sync with their primary operational software or too complicated.”
The unique strategy of Layer has also drawn interest from investors. Executives from Square, Plaid, Unit, Check, and other startups joined Better Tomorrow Ventures in leading a $2.3 million pre-seed investment into the business.
This year, the business intends to use the additional financing to extend its offerings to more small business software platforms. Additionally, it plans to add more engineers and business operations personnel to its current staff of four.
“Our objective is to increase revenue and customer base by three times over this year,” Meretab stated.
