A pair of former New Brunswick Innovation Foundation investors, Raymond Fitzpatrick and Daniel Hoyles, have left the organization to found financial intelligence startup Profitual and close a nearly $1.2 million funding round.

Fitzpatrick was the NBIF’s director of finance and investments for almost nine years, and Hoyles was an investment associate, as well as the former COO of cleantech startup Grey Island Energy.

Their new company promises to use artificial intelligence to probe small and medium-sized enterprises’ financial records and generate models, revenue projections and other calculations, automating some of the sophisticated accounting processes that Fitzpatrick came to admire when he was a financial analyst for Irving Oil earlier in his career.

“I saw what reams of accountants could provide managers,” said Fitzpatrick in an interview. “There was just no end to the reporting power and analysis we were able to do at Irving. And then when I looked at smaller companies that I was working with at NBIF … there’s really no good way to outsource a piece of it, like you would, say, legal.

“That’s where we started kicking around the idea.”

When Hoyles and Fitzpatrick were brainstorming product ideas based on the pain points faced by NBIF’s portfolio companies, they concluded there were two main areas where the startups needed help: business development and finance.

In particular, many startups are plagued by inconsistent record-keeping and accounting practices — a byproduct, Fitzpatrick said, of lean budgets that often cannot support the expense of a robust finance department.

“It's hard to find the time every single month to go and run your actuals, look at your budget, where are the variances? Why did they happen?” said Fitzpatrick, describing his experience as a co-founder of Devil’s Keep Distillery in Fredericton and suggesting that Profitual could also prove useful for similarly traditional businesses. “That's something that our platform is going to automate.”

Fitzpatrick and Hoyles incorporated in 2021, and by February of this year, they had used a $25,000 loan from startup hub Ignite Fredericton to hire a coder from Nova Scotia Community College to help them develop the platform.

Around the same time, the company bagged its first customer and started running at breakeven. And by around eight weeks ago, Profitual had enough traction for Fitzpatrick to also leave NBIF to focus on the business full time.

So far, Profitual has seven employees. An increase in staffing has meant the company is temporarily no longer breaking even, but Fitzpatrick said he and Hoyles plan to focus on operating the business sustainably by gaining traction with customers.

In December, Profitual will bill seven companies to the tune of $26,000, and the co-founders have set a goal of reaching $750,000 in sales next year.

Profitual’s users do not yet pay a set price for its software. Instead, each customer’s monthly rate is negotiated separately as the founders look to validate their business model with startups at a range of different stages in their growth.

“Our pricing right now isn’t productized,” said Fitzpatrick. “It’s a conversation that we’re having with our customers. The idea is that those early adopters inform the platform.”

Early in 2023, he hopes to launch a premium version of Profitual’s budget forecasting feature, making it accessible even to ideation-stage founders in the process of validating their business ideas. Fitzpatrick said the offering will be designed to be about as user-friendly as Excel, but with more flexibility to allow for the highly specialized nature of many startups.