Why Tidemark is investing in Karbon

We’re excited to announce our latest investment in Karbon—the leading cloud-based practice management solution for SMB accounting firms.

As a growth equity firm, we aspire to invest in the high point of excellence. We look for category leaders at the confluence and collision of ideas and domains.

At Tidemark, we have a long history of backing category leaders in Vertical SaaS. We’re excited to announce our latest investment in Karbon—the leading cloud-based practice management solution for SMB accounting firms.  Accountants use Karbon to bring their teams, clients, systems, and data together in one place, significantly improving visibility, efficiency, and connectivity. Karbon has grown into the preeminent independent practice management solution in the accounting industry globally.

As a company, Karbon is everything we look for in a Vertical SaaS business. It’s a leader in its category offering a key control point, with a huge opportunity to extend and expand. We also have a special affinity for accountants. Through our work with Vertical SaaS platforms, we’ve learned that small businesses that work with accountants tend to both survive and thrive. Karbon can also help accountants move away from lower value services like filing taxes towards the value-added advisory work they love.

As part of our investment, we are fortunate to partner with Karbon’s founder and CEO Stuart McLeod. Prior to founding Karbon, Stuart founded Paycyle, a payroll software solution that was sold to Xero in 2011. Through his prior investment in Xero, General Partner Dave Yuan has had the pleasure of getting to know Stuart and watched him build Karbon from the ground up.

Stuart shared, “It is crucial that for us that we find people who share our values and who have the right experience to help us on our journey to serve our customers better. Dave and the entire Tidemark team fit the bill. Dave is one of the most experienced, thoughtful and strategic people I have encountered.  He brings a wealth of B2B and vertical SaaS pattern recognition from his prior investments in Toast, Xero, CCC, Legalzoom, SiteMinder and others.  

The Tidemark team will be Karbon’s X-factor, and I am truly humbled that we can attract such an amazing set of experienced people.”

Here are the top three reasons we believe in Karbon:

#1 Secular Tailwinds

Similar to other recent investments we’ve made like Kajabi and Dutchie, Karbon is benefitting from a paradigm shift we’ve seen around Vertical SaaS vendors (VSVs). Karbon’s platform and business strategy incorporate many of the foundational building blocks we’ve written about in the Vertical SaaS Knowledge Project (VSKP). With a strong control point based on collaboration and workflow management, we believe Karbon has the right to win the accounting vertical by expanding its offering to become an end-to-end practice management platform.

Karbon is also benefiting from significant industry tailwinds. Even prior to the COVID-19 pandemic, the accounting industry was experiencing a shift to a digital/paperless workforce. A younger generation of accounting professionals has begun to replace historically manual/paper-based practices in favor of a tech-enabled strategy. Government initiatives like the UK’s “Making Tax Digital” have also contributed to the broader market move towards digital transformation. The COVID-19 pandemic has only accelerated the move to digital work in accounting, pushing firms to turn to software vendors like Karbon that enable digital engagement with both employees and clients.

#2 Category Leadership

Karbon is the clear category leader and a classic example of a modern cloud disrupter. Relative to a host of legacy vendors who have struggled to move to a cloud solution, Karbon offers a superior user experience through a clean and modern UI.

Karbon’s category leadership was built on a strong, product-centered foundation. Stuart and others from the leadership team have decades of experience building market-leading products for incumbents like Xero and Intuit. Karbon’s team has an intimate understanding of the accountant’s daily tasks and processes which has allowed them to create a vertical-specific workflow solution to address the idiosyncrasies of the accounting profession.

#3 Superlative Fundamentals

We rarely see solutions that are as valued by customers. The Karbon platform is often the first and last thing an accountant sees during their day. Over 80% of the Karbon customers we spoke to spend a significant portion of their day on Karbon, and most consider Karbon to be the most important part of their technology stack. This level of product affinity leads to long-term customer relationships and an opportunity to grow with customers over time.

Having operated under a bootstrapped mentality for a number of years, Karbon has achieved impressive growth on the back of an incredible product offering and strong inbound demand. Karbon has a massive opportunity to accelerate growth through strategic investments in its go-to-market motion and relationships with channel partners like Intuit.

We believe with high certainty that Karbon has the product and organizational foundation to become the holistic practice management solution for the accounting industry. We’re excited to be along for the ride!


February 2022

The information presented in this post is for illustrative purposes only and is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by Tidemark or any of the securities of any company discussed. Tidemark portfolio companies identified above are not necessarily representative of all Tidemark investments, and no assumption should be made that the investments identified were or will be profitable. For additional important disclaimers regarding this post, please see “ Purpose of the Site; Not Investment Advice; No Recommendations” and “Regulatory Disclosures” in the Terms of Use for Tidemark’s website, available at Terms of Use (

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