Prosaic cofounders Rowan Oulton (left) and Nick Houldsworth met at Vend before Oulton headed off for a tour of duty at Slack, while Houldsworth became one of Xero's top execs.
Prosaic cofounders Rowan Oulton (left) and Nick Houldsworth met at Vend before Oulton headed off for a tour of duty at Slack, while Houldsworth became one of Xero's top execs.
A software startup figures there’s one job that everyone’s happy for AI to take: hunting down GST expenses for your tax return.
“Since I started using Xero in 2009, I’ve been diligently wasting a Sunday afternoon every GST return finding all those household costs we can claim toward running oursmall business,” says Nick Houldsworth, who co-founded Prosaic with Rowan Oulton.
“When Chat GPT took off late last year, Rowan and I began testing if the technology could identify them automatically from raw bank transactions. The results, even from an untrained model, were remarkable, and gave me my weekends back, so we took a prototype to a few accounting firms to see if we could do the same for their clients.”
Houldsworth says even their initial stab with OpenAI’s artificial intelligence captured around 80 per cent of the widely-strewn expenses needed to file a return. They’ve since honed their model, using Microsoft’s Github CoPilot, which provides an AI assist for software developers.
Prosaic - barely six months old - is one of a wave of new startups that have used AI for accelerated product development, and (if it does what it says on the tin) new levels of automation for faster, more user-friendly features.
AWS (Amazon Web Services), which itself has just launched a raft of AI tools, has been used for “productionising” Prosaic’s software, Houldsworth says. Outlon says the young firm has also taken advantage of AWS’s “very generous credits for startups”. (AWS says it’s funnelled more than $1 billion into its AWS Activate programme since 2013, which gives free access to 100 products, plus free support, among other perks. A startup can apply for credits worth up to US$100,000 - about NZ$162,000).
Some $1.2b in expenses go unclaimed by sole traders and small businesses each year, Houldsworth and Oulton say, quoting the “Sole Trade Pulse” survey conducted by one of its fintech peers, Hnry, in March.
Prosaic uses AI to track down business expenses that can be made on personal credit cards, or joint and loan accounts - such as a percentage of utilities bills for the use of a home office - making it a hassle for a small business to submit each expense individually, or filter through multiple bank statements to send to their accountant every GST month or year-end.
The software automates this process, enabling users to securely connect any personal bank, card or mortgage data via open finance partner Akahu, Houldsworth says.
The platform uses generative AI (through OpenAI) to identify common deductions, which can be shared in real time with an accountant, and exported to accounting software.
Houldsworth says early adopters have been connecting around three bank accounts, with more than half adding multiple banks. He says that after parsing thousands of transactions in seconds, Prosaic is finding an average of 23 eligible expenses and $475 of deductions per month, helping small businesses and sole traders pocket up to $200 per month through GST and income tax credits.
Multiple hits
The pair already knew their way around software. They met while both working at Kiwi SaaS (software-as-service] success story Vend (sold for $455 million in 2021), where Houldsworth was chief marketing officer and Oulton lead engineer.
Houldsworth went on to become Xero’s executive general manager of ecosystems, before becoming involved with multiple startups as an investor and director, while Oulton did a tour of duty at fast-growing Slack.
Things have moved fast with the new venture, which was only formed in May, and is 100 per cent owned by Houldsworth and has not taken any outside investment. It did land a modest ($25,000) grant from Callaghan Innovation under the Crown agency’s Ārohia Trailblazer grant programme, which offers matching funds to help get a product to market (which rises to up to $4m for more advanced firms).
The pair say the Callaghan grant will enable the team to advance plans to validate the product for international markets, including more than eight million small businesses in New Zealand, Australia and the UK, and help set the stage for future funding.
Accounting firm collaboration
Prosaic was designed in collaboration with early adopter accounting firms including Connected Accountants, Fantail Finances and Rightway.
“Instead of having to chase clients to fill out spreadsheets, Prosaic works behind the scenes, prompting them about potential deductions, which encourages them to talk to us about how we can help optimise their returns,” says Connected director Kevin Summerhays.
Prosaic's founders claim their AI-assisted software can locate expenses across multiple accounts in seconds. The software is still in beta, with the commercial launch expected early next year.
There are still some nips and tucks required for some users. For example, at this stage, expenses captured by Prosaic can’t be imported into the aforementioned Hnry.
But Prosaic is getting close to its official release.
The software is currently free while it’s in an open beta (a re-release version that can be adopted by anyone). The commercial version is expected in a few months as the startup gears toward the next financial year beginning April 1.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
