Mar 22, 2022
The PeakSpan team is thrilled to have led Finally’s Series A financing alongside our partners at Clear Haven, Active Capital and 500 Startups. Upon meeting Felix, Glennys, Edwin and the rest of the team — it was clear from the get-go that this is a squad you do not want to bet against. 2021 was a record year for Finally, eclipsing 1,000 customers and setting the stage for an ambitious “Act II” headlined by the largest corporate charge card launch of all time, bringing on new products and team members, and a rebrand (haven’t heard of Finally? that’s because Finally was formerly “Back Office”). Suffice to say, this team’s moment has “finally” arrived and it’s our sincere privilege to be supporting Finally in its next phase of growth and company development.
Finally is a provider of end-to-end finance automation solutions for SMBs. Below is PeakSpan’s thesis:
Finally sits at the intersection of several, powerful macro tailwinds across i) SMB digitization, ii) accounting automation, iii) B2B payments and iv) embedded finance. The Company’s initial value proposition was predicated on providing “do-it-for-me” bookkeeping automation services. Finally boasts impressive gross and net retention, high gross margins and high customer satisfaction scores given the i) fully automated offering, ii) inherently tedious nature of bookkeeping and iii) world-class customer service. This effort is enabled by a software platform, banking and accounting integrations and a team of bookkeeping associates. Finally’s GTM strategy is diversified, targeting both SMBs and accounting firms who altogether form a multi-billion-dollar software market opportunity for the business. However, this opportunity is secondary (in size), to the embedded finance opportunity sitting beneath the surface which Finally will unlock through offering i) a corporate charge card, ii) payments and iii) banking services. This strategy is compelling for several reasons:
Finally is positioned to first disrupt the accounting industry through automating tedious bookkeeping services. The Company does this today with high effectiveness and customer-satisfaction. Finally sees limited competition in this segment given the need to offer human-in-the-loop platforms in order to deliver do-it-for-me automation. Finally’s roadmap of embedded financial products attacks a several trillion-dollar opportunities, disrupting traditional financial services providers. Bundling accounting automation, expense management, banking, credit cards and payments for an SMB customer is a highly sticky and superior value proposition with value accruing to both the customer and Finally through better extensibility, data synchronization, and automation. Specifically, the customer gets a one stop shop for all finance and accounting tasks while Finally’s team will benefit from more streamlined bookkeeping reconciliation, driving up our margin and scalability.
There are 5.5M SMBs in the US with between 1 and 500 employees who require services surrounding bookkeeping, payroll, expense management, banking, invoicing, taxes, etc. Between 3M and 5M of these SMBs have no finance support whatsoever and must outsource or leverage DIY solutions to get by.
The bookkeeping market is dominated by QuickBooks, a general ledger (GL). Other widely used GLs in the SMB segment include Xero and FreshBooks. An SMB might pay QuickBooks $500 per year for the GL but will then pay a bookkeeper $5,000 per year to keep it running. This is the market Finally has initially gone after with a bookkeeping automation service. Whether serving the small business directly, or the bookkeeping firm — Finally sits on top of QuickBooks to automate the most cumbersome aspects of bookkeeping with a combination of software and via their team of bookkeeping associates. The Company will be offering additional SaaS products over time such as payroll, expense mgmt., tax and analytics.
Finally’s roadmap of solutions represent attractive upsell and market expansion opportunities, each on a stand-alone basis and have one central theme in common — they tie back to the core value proposition of automating bookkeeping. The first product launch will be corporate charge card, which when leveraged by the SMB, results in automatic expense classification (essentially, cuts out the manual effort currently being expended by the SMB or Finally team) through pre-defining what expense category the card spend should tie back into. Next, Finally plans to roll out business banking. Through being the bank, and the card provider and the expense management provider — the data visibility and cohesion will drastically cut down on reconciliation efforts, improving scalability. Lastly, Finally will one day handle payments which drives revenue and stickiness and will represent further progress towards near-fully automated bookkeeping.
Key Market Drivers
Finally is building the first truly end-to-end, full-stack finance automation platform for SMBs. Attacking an exceptionally large market opportunity with an approach that hasn’t been seen before. Financial software, automated services and embedded financial products, wrapped into a single platform with extensible, easy-to-manage workflows for SMB users.