Wave is a free cloud-based accounting platform designed for freelancers, sole proprietors, and micro-businesses. It covers invoicing, accounting, receipt scanning, and financial reporting, all without a monthly subscription fee. Wave makes money through optional paid services like payment processing (when clients pay invoices online) and payroll. For businesses with very small budgets, Wave offers a genuinely useful accounting system at no cost, which makes it popular with startups and side-project entrepreneurs who aren't ready to pay for QuickBooks or Xero. From a custom web application development perspective, Wave's API is more limited than its paid competitors, but it does offer a Connect API that supports reading and writing invoices, customers, and accounts. Integration work typically involves syncing invoice data from a custom system into Wave, pulling payment status into a custom dashboard, or automating the creation of invoices when events occur in another application.
Wave was founded in 2010 by Kirk Simpson and James Fotta in Toronto, Canada. Simpson had previously started a tech company and experienced firsthand how painful and expensive accounting software was for small businesses. His core insight was that millions of small business owners were either using spreadsheets or not doing proper accounting at all because the software was too expensive or too complicated. Simpson bet that he could give away accounting software for free and build a business around financial services layered on top, payment processing and payroll became the revenue model. The bet paid off: Wave grew to over 3 million small business users and was acquired by H&R Block in 2019 for $537 million. The acquisition made strategic sense for H&R Block, they got a massive base of small business customers who also needed tax preparation services.
Wave's "free accounting software" model was considered borderline impossible by investors. Simpson was rejected by dozens of investors before finding backers who believed in the financial services revenue model.
Wave's "free accounting software" model was considered borderline impossible by investors when Kirk Simpson first pitched it. The prevailing wisdom in SaaS was that you needed subscription revenue to build a sustainable business, and giving away the core product felt like a path to bankruptcy. Simpson was rejected by dozens of investors before finding backers who believed in the financial services revenue model. What's particularly interesting is that Wave's free accounting product created a natural funnel: small business owners who tracked their finances in Wave were far more likely to use Wave's (paid) payment processing to accept invoice payments, because the data flowed seamlessly. Also, Wave was one of the first accounting platforms to offer unlimited receipt scanning via phone camera, a feature that drove enormous organic adoption because freelancers and gig workers could snap photos of receipts and have them automatically categorized. After the H&R Block acquisition, Wave began introducing paid tiers for some features, but the core accounting and invoicing remain free.
Visit: waveapps.com