Highlights:
- Finaloop aims to revolutionize e-commerce accounting with its automated bookkeeping platform.
- As per the company’s CEO, Finaloop assists sellers in making smarter, data-driven decisions by reducing financial blind spots.
Recently, the accounting platform focused on e-commerce, Finaloop Inc., secured USD 35 million in early-stage funding.
The recent Series A round, led by Lightspeed Venture Partners, included participation from new investors Vesey Ventures and Commerce Ventures, as well as new backers Accel and Aleph. This brings the total amount raised by the startup to USD 55 million.
Established in 2020, Finaloop operates from offices in New York City and Tel Aviv, with a mission to revolutionize the e-commerce business accounting sector. The company aims to redefine how sellers and retailers manage their finances through innovative automated bookkeeping and inventory cost management solutions.
According to the startup, the e-commerce sector has experienced substantial growth in recent years, with projections from a leading media house indicating global sales are set to exceed USD 6 trillion this year. This trend is fueled by the widespread use of smartphones and the popularity of online marketplaces like Amazon and eBay, as well as social media platforms such as Facebook and TikTok, which facilitate online selling for their users.
However, navigating online sales can be intricate. While platforms like Shopify make it simple for anyone to establish an online store, certain areas have been overlooked. Specifically, the accounting procedures for online retailers have been under-addressed, with many smaller businesses and individual sellers relying on tools like Quickbooks, Xero, and NetSuite.
According to Lioran Pinchevski, the Founder and CEO of Finaloop, the issue is that these accounting tools are outdated, having been introduced more than 20 years ago.
He explained, “The entire e-commerce industry is built on an advanced technological stack with players like Shopify, Amazon, Gusto, Stripe and others, but the accounting and bookkeeping solutions used by these companies were light-years behind every other tool in their arsenal.”
Pinchevski personally encountered this issue when he started his own direct-to-consumer brand before launching Finaloop. He explained, “The result was inventory mismanagement, incorrect pricing decisions and completely unreliable financial reporting.”
Finaloop seeks to revolutionize e-commerce accounting through its advanced automated bookkeeping platform. Operating seamlessly in the background, it manages three essential business functions: maintaining a comprehensive business ledger to record all transactions, utilizing traditional bookkeeping tools to detail these transactions, and employing inventory spreadsheets for monitoring sales and stock levels. This enables sellers to anticipate future sales and ensure the continuous availability of their top-selling products.
The startup asserts itself as the pioneering artificial intelligence-driven accounting tool tailored for direct-to-consumer brands selling across various platforms like Amazon, Shopify, Walmart, and other online stores, in addition to wholesalers and multichannel retailers. Its platform seamlessly integrates with a wide range of sales channels, payment processors, shipping providers, and other essential services utilized by companies. At the core of its platform is the AI-powered reconciliation engine Rico, which automates the categorization of millions of transactions.
According to Pinchevski, sellers leveraging Finaloop gain the ability to make informed, data-driven decisions by eliminating financial uncertainties. This empowers them to accelerate growth, enhance cash flow, and achieve greater precision in their inventory planning processes.
Finaloop, priced at USD 65 per month, has achieved notable success, expanding its customer base by over 400% in the past year. The company asserts it collaborates with “thousands of brands” and oversees a platform handling more than USD 13 billion in gross merchandise value.
Duradry Inc., a vendor of personal hygiene products, was among the earliest adopters of Finaloop. “The magic of Finaloop is that it simplifies the financial process and gives me trust in my numbers. Having this visibility is key, and it never existed before,” said the CEO of Duradry, Jack Benzaquen.
Tal Morgenstern of Lightspeed Venture Partners expressed support for Finaloop due to its potential to disrupt an industry that has remained unchanged for more than three decades. He said, “They are at the forefront of reshaping accounting and bookkeeping for e-commerce by solving its biggest pain points.”
Finaloop announced plans to use the funds to improve its AI-powered e-commerce automation and inventory cost management tools, as well as to expand its market presence.