Layer Raises $2.3M for Embedded Accounting API to Replace QuickBooks

San Francisco-based fintech startup Layer has secured $2.3 million in pre-seed funding to accelerate the development of its embedded accounting API, a solution designed to integrate seamlessly into existing small business platforms and replace legacy systems like QuickBooks. The funding round, led by Better Tomorrow Ventures, signals growing investor confidence in the potential of embedded accounting to disrupt the $146 billion global embedded finance market.

Layer’s mission is to eliminate the need for small and medium-sized businesses (SMBs) to juggle multiple financial tools by embedding accounting and bookkeeping directly into the software they already use—such as point-of-sale systems, neo-banks, and vertical SaaS platforms. This approach not only streamlines financial management but also addresses long-standing frustrations with QuickBooks’ limitations, including complex integrations, API quotas, and fragmented user experiences.

The Vision Behind Layer: Disrupting QuickBooks’ Dominance

Layer was founded in 2023 by Justin Meretab, a former product leader at Square, and Daniel O’Neel, an engineering veteran from Wealthfront. Their goal was to create a set of APIs that allow platform providers—such as Square, Toast, or PayHOA—to offer native accounting features without forcing SMBs to export data or manage double entry. “Many investors we’ve spoken with have told us this is a lofty goal given how much QuickBooks currently dominates the SMB accounting market,” Meretab acknowledged in an interview with TechCrunch. “However, they also agree with our core belief that there’s been a fundamental shift in how SMBs run their businesses that now makes it possible to disrupt QuickBooks’ moat.”

The startup’s embedded accounting solution is positioned as a direct alternative to QuickBooks, enabling platforms to offer features like invoicing, reconciliation, and financial reporting within their own interfaces. By doing so, Layer aims to reduce the operational friction that arises when SMBs must manually sync data between disparate systems. For example, a restaurant using Toast for payments could now access accounting dashboards, tax compliance tools, and expense tracking without leaving the Toast platform.

How Layer’s Embedded Accounting API Works

Layer’s technology is built around three core components:

• API-First Architecture: The API allows platform providers to integrate accounting functionalities—such as ledger management, invoicing, and bank reconciliation—directly into their products. This eliminates the need for SMBs to log into separate accounting software, reducing errors and saving time. The API abstracts complex accounting logic, so developers can implement features with minimal code.
• Pre-Built UI Components: Layer provides ready-made user interface elements, such as dashboards and transaction tables, which platforms can customize to match their branding. This accelerates deployment and ensures a consistent user experience.
• Automated Data Sync: Transactions, payroll, and other financial data flow automatically between the platform and Layer’s backend, ensuring real-time accuracy. This is particularly valuable for industries like e-commerce, where reconciling sales, refunds, and fees across multiple channels can be cumbersome.

Unlike traditional accounting software, which requires SMBs to manually import or export data, Layer’s embedded approach keeps everything in one place. For instance, a self-managed homeowner association (HOA) using PayHOA’s software could generate financial reports, track dues, and reconcile bank statements without ever opening QuickBooks. This integration not only improves efficiency but also increases platform stickiness, as users rely on a single system for both operations and finance.

Why QuickBooks Is Vulnerable to Disruption

QuickBooks has long been the default accounting solution for SMBs, with over 7 million users worldwide. However, its dominance is increasingly challenged by several factors:

• API Limitations: QuickBooks’ API is notorious for its complexity, rate limits, and frequent changes, which can disrupt third-party integrations. SaaS platforms often burn through API quotas rapidly, forcing them to either upgrade to costly tiers or seek alternatives. In 2025, persistent OAuth failures and authentication issues led to widespread downtime for integrations with Power BI and other tools, frustrating developers and end users alike.
• Fragmented User Experience: SMBs using QuickBooks alongside other business tools—such as CRM, inventory, or payroll systems—must constantly switch between applications, leading to data silos and reconciliation errors. Layer’s embedded model consolidates these workflows, reducing the risk of discrepancies.
• Scalability Challenges: QuickBooks struggles to support multi-entity accounting, advanced revenue recognition, and industry-specific workflows. As businesses grow, they often outgrow QuickBooks and migrate to enterprise solutions like NetSuite or Sage, which are more expensive and complex.
• Pricing and Customization: QuickBooks’ subscription costs can escalate quickly, especially for businesses requiring add-ons like payroll or advanced reporting. Layer’s model, by contrast, allows platforms to bundle accounting features into their existing pricing, often at a lower total cost.

“There seems to be a real appetite for a fintech alternative to QuickBooks,” noted TechCrunch, highlighting the surge in interest following Layer’s funding announcement. The startup’s approach resonates with platforms that want to own the entire financial workflow for their customers, rather than ceding control to a third-party tool.

Market Trends Driving Embedded Accounting Adoption

The rise of embedded accounting is part of a broader shift toward “composable finance,” where financial services are integrated directly into non-financial platforms. According to Accenture, up to 26% of the SME banking market will be captured by embedded offerings by 2025. This trend is fueled by several key drivers:

• Demand for Unified Workflows: SMBs increasingly expect their software to handle multiple functions—from sales and inventory to accounting—without requiring separate logins or data exports. Embedded accounting meets this demand by providing a seamless, all-in-one experience.
• AI and Automation: Modern embedded accounting APIs leverage AI to automate tasks like transaction categorization, fraud detection, and tax compliance. Open Ledger, a competitor in this space, reports that AI-driven accounting can reduce manual reconciliation work by up to 80%, while improving accuracy.
• Revenue Opportunities for Platforms: By embedding accounting, SaaS providers can unlock new monetization streams, such as premium tiers, transaction fees, or financial services upsells. Research from Cornerstone Advisors suggests that platforms adding embedded finance features can achieve up to 38% higher average revenue per user (ARPU).
• Regulatory Compliance: Embedded accounting APIs are increasingly incorporating features like auto-e-invoicing (Peppol) and SOC 2 compliance, making it easier for platforms to enter regulated markets without building compliance infrastructure from scratch.

Layer is not alone in this space. Competitors like Open Ledger, Stripe Ledger, and Rutter offer similar embedded accounting solutions, each with unique strengths. Open Ledger, for example, emphasizes AI-powered automation and rapid deployment, while Stripe Ledger is optimized for payment-centric use cases. However, Layer’s focus on SMB platforms and its founding team’s experience in fintech give it a competitive edge.

Layer’s Funding and Investor Backing

Layer’s $2.3 million pre-seed round was led by Better Tomorrow Ventures, a firm known for backing early-stage fintech innovators. The round also included participation from executives at Square, Plaid, Unit, and Check, reflecting the startup’s strong industry connections. “We were drawn to Layer’s vision of making accounting invisible for SMBs,” said a spokesperson for Better Tomorrow Ventures. “The team’s background at Square and Wealthfront gives them a deep understanding of the pain points in SMB financial management.”

The funding will be used to expand Layer’s engineering team, enhance its API capabilities, and onboard more platform partners. The startup has already begun piloting its solution with select customers, including PayHOA, and plans to scale aggressively in 2025. “Our goal is to become the default accounting infrastructure for SMB platforms,” Meretab stated. “We’re starting with the most common use cases—like invoicing and expense tracking—but we’ll quickly expand into areas like payroll, tax filing, and cash flow forecasting.”

Real-World Use Cases and Early Adoption

Layer’s embedded accounting API is designed for a wide range of industries, each with unique financial management needs:

• Restaurant Tech: Platforms like Toast and Square can embed accounting dashboards that automatically reconcile sales, tips, and vendor payments, eliminating the need for manual spreadsheets or QuickBooks exports.
• Property Management: Companies like PayHOA use Layer to provide HOAs with built-in accounting tools for tracking dues, managing reserves, and generating financial reports—all within their existing software.
• E-Commerce: Marketplaces and shopping cart platforms can offer sellers real-time profit-and-loss statements, tax calculations, and inventory cost tracking, reducing the burden of manual bookkeeping.
• Freelancer and Gig Economy: Platforms serving independent contractors—such as Upwork or Fiverr—can integrate Layer to help users track income, expenses, and quarterly tax estimates without leaving the platform.
• Healthcare and Wellness: Clinics and wellness studios using platforms like Mindbody or Jane App can automate billing, insurance claims, and payroll, ensuring compliance with industry-specific regulations.

Early adopters report significant time savings and reduced errors. For example, a Kentucky-based HOA management platform using Layer’s API cut its monthly reconciliation time by 70%, while improving financial transparency for its clients. “Before Layer, we spent hours each month exporting data to QuickBooks and fixing discrepancies,” said one user. “Now, everything is automated and visible in real time.”

Challenges and Risks Ahead

Despite its promise, Layer faces several challenges as it seeks to unseat QuickBooks:

• Market Education: Many SMBs are deeply entrenched in QuickBooks and may be hesitant to switch, even if an embedded solution offers superior functionality. Layer will need to demonstrate clear ROI and ease of migration to win over skeptics.
• Competition: The embedded accounting space is becoming crowded, with players like Open Ledger, Monite, and Basis.so vying for market share. Differentiation will depend on factors like API flexibility, AI capabilities, and go-to-market speed.
• Data Security: Handling sensitive financial data requires robust security measures, including encryption, access controls, and compliance with regulations like GDPR and SOC 2. Layer has prioritized security from the outset, but maintaining trust will be critical as it scales.
• Platform Adoption: Convincing SaaS providers to integrate Layer’s API requires proving that the benefits—such as increased user retention and revenue—outweigh the development effort. The startup is addressing this by offering white-label solutions and dedicated support for integrations.

“The biggest risk isn’t the technology; it’s getting platforms to change their mindset,” noted a fintech analyst. “Many SaaS companies are comfortable outsourcing accounting to QuickBooks. Layer needs to show them that owning the financial layer can drive growth and differentiation.”

Conclusion

Layer’s $2.3 million funding round underscores the growing demand for embedded accounting solutions that simplify financial management for SMBs. By replacing QuickBooks with a seamless, API-driven alternative, Layer is positioning itself at the forefront of a major shift in how small businesses handle their finances. The startup’s success will depend on its ability to onboard platform partners, deliver a superior user experience, and scale its infrastructure to meet the needs of diverse industries.

For SMBs, the promise of embedded accounting is clear: fewer tools to manage, fewer errors to fix, and more time to focus on growth. For platforms, the opportunity lies in deeper customer engagement, new revenue streams, and a competitive edge in an increasingly crowded market. As Layer and its competitors continue to innovate, the days of juggling QuickBooks alongside a dozen other tools may soon be a thing of the past.