In this edition of Localogy’s Local Radar, we focus on AI and SMB-SaaS startups addressing the accounting & finance vertical.
1. Numeral
One necessary evil for many SMBs is sales tax. And without the accounting department normally in place at larger companies, these headaches usually fall on business owners or other associates wearing several hats. For example, one key component of sales tax management is keeping track of how laws are changing in more than 11,000 global jurisdictions. These laws govern sales tax rates and applicability, and how they apply to businesses that are in (or selling into) a given jurisdiction. These factors make sales tax management one of the many functions high on the list of targets for disruption and automation in the AI era. And that’s what Numeral aims to do. The company recently raised $35 million in Series B funding led by Mayfield, giving it a $350 million post-money valuation. It was able to attract this funding because it’s AI native. There are several companies in the broader sales tax management space, but all will be disadvantaged in their AI retrofitting, versus AI native companies like Numeral. And in addition to tax management tasks happening in the background, such as the jurisdictional headaches noted above, Numeral goes a step further in filing and paying taxes on behalf of its users. This will make it a welcome pain pill among SMBs, with 35 million confidence signals to back up that potential.
2. Rillet
As seen with Numeral, AI could be most welcome when it eliminates headaches. To add to that list, AI is also good at replacing headache-inducing tasks that happen to be mechanical, repetitive, and rote. Among all the functional business areas to which these descriptors apply, accounting is near the top of the list. And the functional center of any accounting department – among large businesses and SMBs – is the good old general ledger system. It holds and summarizes all the transactional data needed for financial statements and tax preparation. This is where Rillet hopes to use AI to transform the general ledger, and it recently received $25 million in series A funding, led by Sequoia, to do so. The company uses machine learning to automate accounting reports and financial statements. It taps into its customers’ banks and fintech platforms to automatically generate all the financial data needed for things like balance sheets and P&Ls. The value proposition for resource-constrained SMBs is to close their monthly or quarterly books in hours rather than weeks. And that message is working so far, given Rillet’s 5x year-over-year revenue growth and 200+ paying customers. But there are switching costs, which translate to adoption barriers for new entrants. Getting companies to switch their general ledger systems is onerous and invasive. So Rillet is hoping to seize the current moment of AI disruption and replacement cycles. As with Numeral, it will have an AI-native advantage versus the many accounting systems out there, in the process of retrofitting themselves for AI.
3. Mynt
One of the things that made SaaS so popular is that it democratized advanced software functions. This resonated throughout the SMB world as it brought small companies the capabilities of big ones. You no longer needed a massive software installation and on-premise servers… cloud SaaS made it all possible for a monthly subscription. A few classic examples are tools like Shopify and Stripe that bring plug & play eCommerce and payment processing down-market. Elsewhere on that list is spend management, such as corporate expense cards. This is the area that Mynt wants to democratize and bring to SMBs. Its goal is to eliminate the pain points in employee spend management, such as complex accounting and approval structures in DIY programs, using Amex cards. These pain points have held the field back from its potential among SMBs. This opens up a considerable market for Mynt, which was enough to attract a $23 million funding round earlier this year, bringing its total funding to date to about $50 million, and a post-money valuation of $210 million. Meanwhile, Mynt addresses a wide swath of businesses, given that its software is designed for companies with two to 500 employees. Its average customer size is 50 employees. Meanwhile, its traction speaks for itself with SMB customer growth of 3,000 to 12,000 in the last year alone. That strikes a balance of healthy growth, while still leaving ample headroom, considering the tens of millions of SMBs still to capture.
