Omar Qadi CEO and Co-founder of Abacus talks to Enterprise Times Image Credit Decroos
Omar Qari CEO and Co-founder of Abacus talks to Enterprise Times

Omar Qari is the CEO of start-up Abacus software that provides a SaaS solution for real time expense management. In the run up to Christmas we interviewed him to discover more about his company and their plans for 2016. Abacus recently launched on the NetSuite appstore bringing their expenses platform to a wider audience.

Lessons from the beginning

Omar Qari Co-Founder Abacus (Source linkedIn)
Omar Qari Co-Founder Abacus

Financing a start-up is never easy. What is different about Abacus from many others is that they list 13 entities involved in the seed funding that raised $3.5 million in October 2014. Why so many? We asked Qari that exact question.

There were two main lead investors, General Catalyst Partners and Bessemer Venture Partners, some of the others were the founders and individuals that were tangentially related to Abacus: the founders of Stripe (Patrick and john Collison) and the founder of Zen Payroll (Josh Reeves), were very valuable to us from an advisory perspective.”

Qari elaborated on the approach taken: “The order of operation for the seed round was a bottom up approach – first we went out and raised from the individual investors before going to larger venture backing.” The approach is a sensible one and Qari also gained the individual backing of Jeff Epstein, ex CFO of Oracle and now also an operating partner at Bessemer. Qari sees a continued benefit from their involvement as he continued: “…some of those investors have been our most valuable investors, because they have been there before. Learning from what they have done in the past.”

The last year has been spent creating the product and understanding what target market is best suited. He was very clear in what the next round of funding would enable Abacus to do: “To go out and start aggressively ramping up on our sales and marketing efforts”.

This is not the only approach that start-ups can take and while Qari seems to have stumbled upon it, it is a sensible one. Not only do smaller experienced executives bring advice and experience, they can also help gain the confidence of the larger venture partners. It is interesting that Epstein invested privately as well as part of the Bessemer Venture Partners. His continued involvement in the second round, assuming Bessemer follow up, is likely to help Qari raise the required funds.

The market that Abacus will be targeting is companies with less than 1000 employees, a large proportion of whom spend time travelling extensively. Interestingly Qari targets the finance teams rather than IT. This shadow IT approach has also opened up a couple of new opportunities that will be interesting for many companies. It also shows that while corporate IT systems are important there is a market for systems that sit, if not outside then on the periphery.

Qari continued: “We built the product for companies to use with their employees, but companies actually used it in ways that we never anticipated. One of those use cases is among contractors. We have companies where they managed their entire contractor workforce, not from a regular payment perspective but from an incidental managing different purchasing of supplies to get the job done. The Other use case, interview candidates, (they are) very quick to onboard (with Abacus) within 10-15 seconds and get them paid back within a couple of days. Thus giving a modern candidate experience to potential employees.”

It is this latter use case that will be of interest to many companies that offer to reimburse candidates for expenses. No start-up can be prescriptive about its target market and in allowing its customers to realise and explore the benefits it has created a market opportunity that it had not thought of prior to launch. It may also open up Abacus to larger employers.

Growing Abacus into a “Giant company”

One of the questions Qari is often challenged with is that real time expenses surely mean a greater time spent by management to approve expenses. This is a valid challenge but the flexibility that real time expenses means is that rather than create expense batches by employee the Abacus system is able to offer greater flexibility for approvers that simplifies their task. It is possible to create virtual batches based on several criteria, for example all simple expenses by travel type that are within policy can be approved and subsequently payments made.

This actually increases the flexibility by which managers can approve expenses. Whether this scales into larger organisations is questionable and certainly some organisations would need to carry out some process changes in order to take advantage of this both within the accounts and management structures. For some organisations this may increase the number of bank payments made, if there are costs associated with these then this could become an issue if unmanaged.

Abacus initially found traction with start-ups and Qari talked about their first customer: “It was a very small start-up called Branch, since acquired by Facebook. The company was using Abacus with 10-20 employees, they would use Abacus for reimbursing laundry bills as that was one of their employee perks, all of their meals, their airfare. They were using it as their Venmo or PayPal for companies where they would get reimbursed within a day or two. We initially had a high concentration of start-up customers, today from a technology standpoint it is now less than half.”

The reliance on start-ups for customers is risky, Abacus would experience that as their first customer loss was also Branch, when it was acquired by Facebook. A large proportion of start-ups fail and many others are acquired rather than grow. Qari himself hopes to grow Abacus into a large corporation and refused to be drawn on the end game.

At this stage in its evolution Qari is right to be thinking about growth, the company is too small to be acquired and if someone did come looking it would be for the technology rather than the customer base. Abacus now has more than 400 clients now but will need to expand more rapidly in 2016 as it looks to grow its revenue and market value.

(Page 2/2 What does the future hold for Abacus and cloud computing) …


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