Amid a wild fall and a last-minute revival of Bench, the VC-backed accounting startup imploded during the holidays.

Friday, December 27th was supposed to be the start of a rest day.

But it was chaos for the thousands of small business owners who use Bench, the Canada-based accounting and tax startup that raised $113 million from investors like Bain Capital Ventures and Shopify.

That morning, they couldn’t access their accounts just as tax season began. Bench’s entire website was offline, except for a notice that it was shutting down after 13 years of operation.

Multiple former employees told TechCrunch that hundreds of Bench employees were fired immediately without any severance or notice. Emails TechCrunch sent to staff later that day were bounced.

The move was so sudden that a customer who had kept information on Bench’s website for years and was even listed on its front page before it went offline only found out about the closing. TechCrunch called him for the reaction.

“I wasn’t aware of that,” said Radiator co-founder Justin Metros. “I’ve never seen anyone get shut down like that. This is madness.”

Bench automation struggles

Bench has described itself as a tech accounting and tax startup with an intuitive platform that any small or medium-sized business can use. It claimed to have over 12,000 customers before it closed.

One reason for the company’s struggles, according to some employees, was its adoption of artificial intelligence and other automation tools in recent years.

Former employees told TechCrunch that automating accounting tasks like expense classification is simpler in theory than in practice. One former employee argued that AI was the only way Bench could scale, but its execution was flawed and the tools it built weren’t working properly. Overreliance on these tools sometimes led to delays at the expense of human accountants, with books being passed between different teams instead of staying with one employee.

These delays caused some customers to quit. One former employee told TechCrunch that some customers are still waiting for their 2023 books in September 2024, well past the key tax deadlines.

Bench was fired several times starting in late 2022, according to former employees. In January 2023, the number was around 700, but at the end of 2024, LinkedIn reported that Bench employed fewer than 400 people.

Rumble above

The execution issues were complicated by the uproar in the Bench. Bench’s first CEO, co-founder Ian Crosby, left in 2021, just months after Bench raised a $60 million Series C round. Crosby accused unnamed board members of forcing him to replace him with a “professional CEO” after they disagreed on strategic decisions.

“I hope Bench’s story serves as a warning to VCs who think they can renew a company by replacing its founder. It never works,” Crosby wrote LinkedIn post after a sudden shutdown.

Bench’s second CEO was Jean-Philippe Durios, who previously served as CFO. According to former employees, he focused on making the company profitable. Automation could, in theory, make Bench less reliant on expensive human labor to serve its many customers. But the gambit didn’t work amid execution problems, customer churn and declining investor interest in non-AI companies.

Bench changed CEOs again in November 2024, bringing in resident Adam Schlesinger of VC firm Inovia Capital, one of Bench’s investors.

According to Schlesinger, a former Microsoft executive who also previously served as president of the tequila company, that’s when the decision was made to sell the company. Always Tequila.

“I was put in place by Inovia Capital and then went through a process to acquire the company,” Schlesinger told TechCrunch. “They needed someone to steer the ship through a difficult process.”

An unlikely revival

This process did not work. Bench was abruptly shut down on December 27 without any notice or layoffs to employees, multiple former employees told TechCrunch. The move was forced by the bank’s call on Bench’s venture debt. He published information about this. According to a former employee, Bench continued to sell until the day it closed.

The shutdown attracted media attention in the United States and Canada. Ironically, it was this focus that saved Bench, Schlesinger told TechCrunch.

“It wasn’t until we closed that all the PR, including from you guys, basically let the world know that we were for sale, and then we got a lot of interest,” Schlesinger said.

“I haven’t slept in 72 hours,” Schlesinger admitted.

The buyers were unconventional. Jesse Tinsley, CEO of Employer.com, a San Francisco-based HR tech firm, was on vacation in Florida when he saw news about Bench a day after the public shutdown. Tinsley, who runs a number of HR and recruiting-related businesses, bought the Employer.com domain name a month ago for about $450,000. placed It’s LinkedIn.

Tinsley and his team spent the next 36 hours working out a deal. Early Monday morning, Employer.com officially announced plans to acquire Bench for an undisclosed price.

“I hadn’t officially met with anyone on the Bench team until Saturday afternoon,” Tinsley said afterward he tweetedBy sharing the infamous photo of Elon Musk carrying a sink on Twitter, with just his face and bench with photoshop into the picture. “However, we have saved hundreds of jobs and thousands of customers a huge hardship.”

Uncertainty remains

Employer.com makes big promises to revive the Bench. For starters, it’s re-extending “a large number” of former Bench employees, Jennifer Bouyoukos, Bench’s Chief People Officer, told TechCrunch.

It also says it will honor customer contracts and fully service their accounts, Tinsley tweeted. Bench’s original closing notice recommended a six-month extension with the IRS to find a new accountant for its clients. Now, Bench does not recommend extensions as long as customers decide to stay.

But there are uncertainties about Bench’s durability, given his last-minute fire sale.

Purchases typically take months and require extensive due diligence that cannot be done over a holiday weekend. Employer.com also didn’t have direct expertise in accounting until the Bench acquisition—instead, it focuses on payroll, recruiting, and other HR-related areas. If Bench’s downfall shows anything, it’s that accounting is its own beast.

Given the sudden layoff of all Bench staff on December 27, there are concerns whether customers will have access to the same quality of service. While many workers have been rehired, at least some are being offered only 30-day contracts. Three former employees told TechCrunch.

In response, Matt Charney, Chief Marketing Officer of Employer.com, told TechCrunch that while “the deal happened quickly,” it involved “a lot of law firms” and that with the reputation and experience of Employer.com Bench, ” feels very comfortable.

Because of Employer.com’s lack of prior accounting experience, Charney says Bench was acquired for its employees, experience and clients “who can help us get that experience very, very quickly.” Employer.com declined to comment specifically on the 30-day contracts as of press time.