For consumers, one of the big pluses of e-commerce is the convenience: You can shop anytime, from anywhere, and these days pay with a simple tap of your finger (and pay pretty much any way you want). Underneath that, however, is a mass of fragmentation and complexity, and it’s usually the retailers who take it on the nose. A startup called Finaloop is aiming to improve that for these e-commerce businesses — by way of their accounting software — and on the back of strong growth, it’s raised $35 million in funding.
Lightspeed Venture Partners is leading the Series A, which also includes participation from Vesey Ventures, Commerce Ventures, plus previous backers Accel and Aleph. Finaloop, which is based in New York but with roots (and R&D) in Tel Aviv, had previously raised $20 million. It’s not disclosing valuation.
Finaloop CEO and founder Lioran Pinchevski is an accountant by training but an entrepreneur in his heart. Before starting the company, he worked for nearly a decade in senior roles at PwC, primarily on thorny accounting issues that arise in the process of mergers and acquisitions. On the side, he built startups.
The last of them was a direct-to-consumer health tech startup focused on sperm freezing called Sppare.me, which he scaled to a “high seven figures” in sales, he said. That was hard-won success:
It is what gave Pinchevski the inspiration to tap his accounting expertise to start Finaloop.
E-commerce has exploded in the past few years, and it’s projected to pass $6 trillion in sales globally this year, says eMarketer. That’s thanks to evolving consumer buying habits and the ubiquity of smartphones and other screens and because of the growth of marketplaces like Amazon, social media platforms and platforms like Shopify that make it easy to spin up online storefronts.
Yet under the hood, retailers have a lot of work to do to run their businesses, and that is what Pinchevski found to be onerously time-consuming and not really tapping the same skillset or interests that led them to become e-commerce founders in the first place.
“Every online seller needs to do accounting, both from a compliance perspective and a business visibility perspective,” he said. Typically, small e-commerce companies will either manage their own bookkeeping or work with a third party to carry this out. In both cases, the bookkeeping would be done using software like QuickBooks or NetSuite or Xero and potentially be very complicated, not least because e-commerce sellers are using a number of different channels to source, sell and distribute goods today.
“But e-commerce founders can be very digital-first, young, dynamic people, so they hate it,” he said.
Finaloop’s solution is a platform that uses automation in the background to track transactions covering three different functions in one: the business ledger recording all transactions; the bookkeeping work to make sense of itemizing those transactions; and the inventory spreadsheets that are used not just to track what is being sold but to make projections for the future of what might be needed.
It integrates with a wide range of platforms that a company might be selling on — like Amazon, Walmart or even TikTok — or using for payments, shipping or other services. While there are indeed a number of accounting tools available to smaller businesses today, Pinchevski said that this is the only one that is dedicated specifically to smaller e-commerce operations, which covers the whole span of their accounting and bookkeeping needs.
SaaS pricing starts at $65/month, which goes down per month for a yearly subscription or up if adding on its tax solution.
The growth of companies like Finaloop is notable in the context of the cycle of innovation we are seeing.
While the frontiers continue to be pushed in areas like AI, quantum computing and food tech and what might come tomorrow, there remains a steady beat of interest in solving much more immediate problems for companies operating on the platforms of today.
At the same time, Finaloop has an opportunity to bring on more users because of another shift in tech. E-commerce rollups, funded with hundreds of millions of dollars, once promised smaller e-commerce better economies of scale if they sold up to them. This is the same highly fragmented market that Finaloop wants an opportunity to consolidate, as many of those rollups have struggled and disappeared. Finaloop potentially gives smaller e-commerce companies another route to existing on their own as independent businesses.
It’s showing some signs of success, growing its customer base by 400% in the last year, working out to $13 billion of GMV managed on its platform across thousands of customers. The numbers will have helped seal the deal on this funding round.
“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 their biggest pain points,” said Lightspeed partner Tal Morgenstern in a statement. “We’re excited to support the Finaloop team with their goal of providing e-commerce companies real-time financials, giving them an invaluable edge over their competitors.”
