Startup Burnout: How Bench Exhausted $135 Million and Crumbled Under Debt

Bench, a Canada-based startup that provided cloud accounting software for small businesses, officially shut down after more than a decade of financial struggles. Newly revealed bankruptcy filings outline the company’s collapse, attributing it to an unsustainable cash burn and mounting debt. Between its founding in 2012 and September 2024, Bench burned through $135 million without reaching profitability.

By the time of its shutdown, Bench was grappling with a severe “liquidity crisis.” The company’s Canadian bank account held only $800,000, while its U.S. entity had less than $400,000 in reserves. Despite some progress in recent years, it became evident that financial adjustments were insufficient to turn the company around.

When Bench’s second CEO, who had previously served as the company’s CFO, took over in 2022, cost-cutting measures were implemented, including layoffs. These efforts helped reduce the company’s losses significantly. From March 2022 to March 2023, Bench recorded $42 million in revenue but lost nearly $30 million. The following year, the company increased revenue to $49 million while cutting its losses by half. Still, the improvements were not enough to address its underlying financial instability.

In June 2024, Bench secured over $40 million in loans from its primary lender, the National Bank of Canada (NBC). This lifeline was intended to provide Bench with time to explore strategic options, including a potential sale. However, the company continued to face challenges as its losses mounted. In December 2024, just days before the company’s collapse, NBC agreed to a forbearance agreement, temporarily pausing Bench’s loan repayment obligations.

Despite this temporary relief, Bench shut down only 13 days later. The bankruptcy filings do not provide an exact reason for the sudden closure, but reports suggest that a bank, possibly NBC, called in its venture debt. There are also indications that NBC declined further concessions as the company sought a buyer. According to the filings, Bench owed NBC $51 million, with this debt continuing to accrue interest and additional fees.

In a surprising turn, U.S.-based Employer.com announced its plan to acquire Bench within 72 hours of its collapse. The acquisition is expected to close by February 28, 2025, according to the agreement outlined in the filings.

The collapse of Bench serves as a cautionary tale for startups about the risks associated with heavy reliance on debt. As experts predict more fire sales and shutdowns in the coming year, the role of venture debt lenders in determining the fate of struggling startups will likely become even more significant.