For consumers, one of the big pluses of e-commerce is convenience: You can shop anytime, from anywhere, and today pay with a simple tap of the finger (and pay pretty much any way you want). Underneath, there’s a mass of fragmentation and complexity, and it’s usually the retailers who take their noses. A startup called Finaloop aims to add that to this e-commerce business – through accounting software – and at the end of strong growth, it raised $35 million in funding.
Lightspeed Venture Partners led the Series A, which also included participation from Vesey Ventures, Commerce Ventures, and previous backers Accel and Aleph. Finaloop, which is based in New York but with roots (and R&D) in Tel Aviv, previously raised $20 million. It does not reveal its value.
Finaloop CEO and founder Lioran Pinchevski is an accountant by training but an entrepreneur at heart. Before starting the company, he worked for almost ten years in a senior role at PwC, mainly dealing with thorny accounting issues arising in the merger and acquisition process. On the side, he built a startup.
The latter is a direct-to-consumer health technology startup focused on sperm freezing called Sppare.me, which is pushing into the “high seven figures” in sales, he said. A very successful one:
This is what inspired Pinchevski to tap into his accounting expertise to start Finaloop.
E-commerce has exploded in the past few years, and is expected to surpass $6 trillion in global sales this year, eMarketer said. It is thanks to the evolving consumer buying habits and the many smartphones and other screens and due to the growth of markets like Amazon, social media platforms and platforms like Shopify that make it easy to play online storefronts.
But under the hood, retailers have a lot of work to do to run their business, and this is what Pinchevski found to be too much time and not following the same skills or interests that made him an e-commerce founder in the first place.
“Every online seller needs to do accounting, from a compliance perspective and a business visibility perspective,” he said. Typically, small e-commerce companies will manage their own bookkeeping or work with a third party to do this. In that case, the bookkeeping will be done using software like QuickBooks or NetSuite or Xero and can be very complicated, not least because e-commerce sellers use several different channels to source, sell and distribute goods today.
“But e-commerce founders can be digital-first, young, dynamic, so they hate it,” he said.
The Finaloop solution is a platform that uses automation in the background to track transactions that includes three different functions in one: the business ledger records all transactions; bookkeeping work to make sense of itemizing these transactions; and an inventory spreadsheet that is used not only to keep track of what is sold but to make projections for the future of what may be needed.
Combined with various platforms that companies can sell – like Amazon, Walmart or even TikTok – or use for payments, shipping or other services. While there are several accounting tools available for small businesses today, Pinchevski says this is the only one specifically for smaller e-commerce operations, covering all of their accounting and bookkeeping needs.
SaaS prices start at $65/month, which goes down monthly for annual subscriptions or up if you add a tax solution.
The growth of companies like Finaloop is notable in the context of the innovation cycle we see.
As the frontiers continue to be pushed in areas like AI, quantum computing and food technology and what’s to come tomorrow, there remains an abiding interest in solving problems faster for companies operating on today’s platforms.
At the same time, Finaloop has the opportunity to bring in more users due to other technological changes. E-commerce rollups, funded by hundreds of millions of dollars, once promised smaller e-commerce with better economies of scale if sold. This is a very fragmented market that Finaloop wants the opportunity to consolidate, because many rollups have struggled and disappeared. Finaloop has the potential to give smaller e-commerce companies another route to becoming a stand-alone business.
It shows some signs of success, increasing its customer base by 400% in the last year, reaching $13 billion GMV managed on the platform across thousands of customers. These figures will help seal the deal in this round of funding.
“Finaloop is shaking up an industry that hasn’t seen material change in over 30 years. They are at the forefront of reshaping accounting and bookkeeping for e-commerce by solving the biggest pain points,” Lightspeed partner Tal Morgenstern said in a statement. “We are excited to support the Finaloop team with the goal of providing e-commerce companies with real-time financials, giving them an invaluable edge over their competitors.”
