A clearer picture of Bench’s downfall is emerging thanks to newly released bankruptcy filings.
The records show that the Canada-based startup, which ironically enough offered cloud accounting software for small businesses, consistently struggled to reach profitability. It burned through $135 million from its founding in 2012 to September 2024.
By the time of its collapse, Bench was forced to shut down due to a “liquidity crisis,” the records say. Bench had $800,000 left in cash in its Canadian account while a separate account for its U.S. entity had less than $400,000.
Bench had been making some progress on cutting its burn in recent years, the filings show. Improving finances was the main mission of Bench’s second CEO, Bench’s former CFO who took over in 2022 and began conducting layoffs, according to former staff.
For example, Bench lost almost $30 million on $42 million in revenue from March 2022 to March 2023. But Bench cut its losses in half the next fiscal year while growing revenue to $49 million.
But that wasn’t enough improvement to stop Bench’s losses from accumulating. As the company struggled, in June 2024, Bench’s biggest lender, the private National Bank of Canada (NBC), made over $40 million in loans available to Bench, per the filing.
That gave Bench some time to shop itself around for a sale, the task of its third CEO. And NBC appeared on board: On December 12, 2024 — just 13 days before Bench’s collapse — NBC signed a new funding and forbearance agreement with Bench, the filing says, meaning it agreed to temporarily pause or modify the startup’s loan repayment obligations.
The records don’t specify exactly why Bench shut down just two weeks later. A bank — possibly NBC — called in Bench’s venture debt, The Information reported. Newcomer reported that NBC declined to make other concessions as Bench was being shopped around.
NBC didn’t respond to a request for comment from TechCrunch. NBC is owed $51 million by Bench and this number is continuing to accrue due to interest and other fees, the filing notes.
Regardless, Bench is now on a new path after U.S.-based Employer.com suddenly announced it planned on acquiring the startup just 72 hours after its collapse. That process is based on an agreement that “contemplates” a closing date of February 28, 2025, per the filing.
Still, Bench’s bankruptcy offers a window into the dangers of too much debt for startups. And venture debt lenders will play a big role in the fire sales and startup shutdowns that are predicted to continue at a fast clip this year, experts say.
