How 3 CAs founded a startup to automate Account Confirmation & Reconciliation, identifying INR 270Bn discrepancies

• Hi there! I am Prashant Gupta, a Chartered Accountant, and CEO of Firmware.
• In 2015, Vivek Chandan and I were discussing how the audit confirmation processes are still manual and not automated and how auditors are downplayed by manual systems where clients mislead them with false information.
• We wondered how this can be eliminated and after a lot of brainstorming, in 2016, at the age of 23 Vivek, Jay Savla and I co-founded Firmway – a tech platform to automate account confirmation & reconciliation.
• We bootstrapped the startup from day one and did everything we could to build it up.
• The journey was definitely not easy but all the efforts paid off, as today the platform is connected to over 1,00,000+ businesses, reconciled INR 4,500 billion worth of entries, and identified INR 270 billion worth of discrepancies.
• Here is our startup journey.

Back Story: Why CA?

My dad is a Chartered Accountant (CA) and as a kid, I was impressed by the respect he used to get from everyone around him. He is the motivation for me to become a CA. Now in our family of 5, 4 of us are CAs!

Furthermore, I have been closely acquainted with the stock market since my childhood as my dad was a stockbroker. Sadly, I witnessed its wrath many times in my early days and always used to wonder how fraud happens for so long and the public is fooled with their life savings. That’s how I decided to pursue CA – to become an Auditor to help detect fraud.

Just like me, Vivek Chandan my fellow CA and now co-founder studied in a vernacular medium school and was inspired by his uncle to become a CA. (Vivek and I did our articles at the same firm.)

Jay Savla, also a fellow CA and co-founder used to sit at his dad’s retail shop and help him out. Here he got acquainted with Accounting and decided to pursue CA.

We met each other during our CA journey and stayed friends.

The idea is to start an Account Confirmation technology startup

After qualifying as a CA, Vivek joined KPMG in their Audit team.

While working there he mentioned how as an Audit Executive, he was asked to do a manual audit confirmation. The Audit Partner would state that we need to try for 100% responses to all the balance confirmations from the client’s customers, vendors, and banks as it helps auditors unearth any kind of fraud taking place in the company.

Needless to say, Vivek found it to be a very monotonous task requiring no application of mind. Here he had to manually prepare and courier letters, then continuously follow up on responses, track delivery through acknowledgment slips, prepare box files to collect paper responses and then summarize it in Excel. In today’s technology-driven world, this was unacceptable.

That’s when Vivek approached me with the idea “Can we Automate it?”.

Considering my vision to help the investor community and my desire to be an entrepreneur, I said a big yes to this idea.

We then brainstormed a lot and realized that the billion-dollar Satyam scandal in 2009 was a perfect example of how fraud could have been detected in its nascent stage if the confirmation process were robust.

Further, we realized that it is estimated that a business loses ~10% of its net profit, every year, due to Bad Debts, Unclaimed GST Credits, TDS Mismatch, Hidden Charges, Duplicate Payments, Accounting Frauds, Long Collection Cycles, and so on due to lack of transparency with the customers and vendors.

This encouraged us to come up with a solution to create a platform to bring the desired transparency which would not only reduce fraud but will add significant value to companies bottom line.

It was here that the idea of launching an Account confirmation and reconciliation tool was conceptualized.

But what next?

Brainstorming and finally launching the startup

Being CAs, we were very clear that a business does not survive on just good ideas.

So before establishing the startup, we did thorough research on market size, financial projections, and prospects’ feedback to ascertain business viability.

We also ran the idea and plan through our mentors, the managing partner with whom we did our articles, and our closest friends.

That’s when our friends, Final Zakhariya and Jay Savla got so inspired by our idea that they decided to take the plunge with us on Firmware.

After 6 months’ worth of detailed research, feedback and advice, we quit our respective jobs and incorporated Firmway in 2016. We were only 23 years old then.

Funding our idea and finding our way with technology

After all this, we kept asking ourselves two questions: How do we fund our startup and how do we build the tech part of it?

On the funding part – we come from a thought process where we did not want to risk external investors’ money until we create a successful viable business model. As a result, we bootstrapped the business.

We divided roles – Vivek ran the CA firm to fund Firmware and I concentrated full-time on Firmware from day one. In addition, we invested all our personal savings and took some funds from our families to invest.

Now the tech part was tricky. Being CAs, we did not know anything about coding, and we learned early on that having a trustworthy tech guy is very important, or one could be easily fooled!

We met big tech companies and were frightened by the quotes we got. What now?

Luckily, a close friend of ours connected me to Krupal who had recently started his tech company and was looking at working with startups. We met him and knew that he was our guy. He then went on to build our entire tech stack.

However, the journey was not that simple – from changing requirements, late-night deliveries, fighting on change requests, beta testing, product launches, and pilots we finally launched our first tool – Audit Confirmation.