Paro, a Chicago-based company that uses technology to bring freelance accounting and finance professionals together with companies that have short-term and temporary staffing needs, has raised $10 million in funding.
The company plans to use the money from the recent fundraising round to expand its suite of workflow automation tools and to pursue more enterprise clients, among other things.
Funding came from early-stage venture capital firm Sierra Ventures, which led the round of financing. Existing investors in Paro, including Revolution Ventures, KGC Capital and Tom Williams, also participated.
Paro works from both the supply and the demand side, according to Alexa Lemmo, business development manager for partnerships. The company has built up a cadre of highly qualified accounting and finance professionals interested in temporary work, and then works with client companies to determine their staffing needs, so it can best match them with the talent they need.
“Say Client A has a need for a fractional controller — they have a couple of staff accountants, a bookkeeper, and they’re looking to get the CFO out of the weeds,” she explained. “We plug in a controller for 15-20 hours a week. The company gets a free call with one of our financial consultants for a needs assessment, then our experts run a search on our platform, and they come back with the best two or three matches. Then it’s at the client’s discretion to speak to all of those freelancers and interview them and talk about the scope of work. And we have a dedicated talent management team who are in constant communication with the client and the freelancer to ensure success.”
Paro claims that its search algorithm for matching experts and clients is so powerful that 95 percent of clients end up working with the first or second professional they’re matched with.
“One key is the quality of our network and the way we vet and accept professionals to freelance on our platform — there’s a seven-step vetting process, and we’re accepting less than 2 percent of our applications,” she said.
Applicants go through background and reference checks, must be QuickBooks-certified, and pass various tests. Paro has 1,800 professionals in its network and a waitlist of many more.
An opportunity for accounting firms
Lemmo noted that Paro also works closely with CPA firms. “We’ve built out a white-label partnership with them during busy season where they can leverage our network when they need, say, a tax preparer or tax reviewer,” she said. “It allows them to never say no to a client or to more work.”
“In the white label model, the Paro expert presents themselves as a CPA or employee of their firm,” she continued. “It’s up to their discretion to tell the client whether they’ve brought in a third-party. They can bill out our freelancer at a higher rate and then take home the difference between what we charge.”
Accounting firms can also use Paro freelancers for their own internal needs; Lemmo noted that 20 or so firms have already reserved help for the upcoming tax season. “We’re making a big push to line up our experts for that,” she said.
Paro’s freelancers set their own rates, but they are approved by the company. Hourly fees for bookkeepers range from $40-$60, for CPAs from $80-$120, for controllers and FP&A experts from $150-$250, and for CFOs from $250-$400.
Because the company is aiming to have all of its engagement be virtual — at the moment, 95 percent are — there’s an opportunity for accounting firms and businesses in large metropolitan areas to engage in some wage arbitrage.
On the other hand, Lemmo said that the virtual aspect can be an issue for some clients: “Probably the No. 1 objection is that it’s virtual — we combat that by having our account management team to support the clients and get them onto the right platforms,” she said. “We’ve rolled out a lot of new software, getting clients from QuickBooks to QuickBooks Online, for instance, and gotten them on Bill.com and other systems that are going to get them onto the cloud. We hold their hands throughout that process and make them comfortable that this is the way the world is moving.”
For more information, visit Paro’s website.