ScaleFactor accountancy AI 'automation'
Occurred: July 2020
Back office automation start-up ScaleFactor has collapsed claiming the COVID-19 pandemic had wiped out its business.
But the problems appear to be more related to losing the confidence of its investors and customers, who said its products failed to work properly and the company consistently over-promised and under-delivered.
Established in 2014 in Austin, Texas, ScaleFactor built accounting AI-based automation and book-keeping software for small businesses that integrated with Quickbooks and Xero in such a way that it would 'revolutionise accounting'.
In fact, as Forbes discovered, it often relied on traditional bookkeepers and hired a Filipino contract accounting firm. Customers received monthly statements rather than the real-time data they were promised.
The company had raised USD 100 million shortly before its demise.
Sector: Business/professional services
Purpose: Automate book-keeping, financial forecasts
Issue: Business model; Effectiveness/value
Published: March 2023