In this post I continue the fintech market map deep dive video series. In part 5, I explore another B2B segment - financial management & workflows. I try to highlight some of the nuances and exciting trends in this space. Click on the video for the full take and check out the highlights below.
What is it?
Financial management & workflows is another way of saying the finance tech stack or CFO tools. This category encompasses the set of products and services that companies use to manage their finances.
It's meaty because it spans a broad range of needs. ERP and accounting, payroll, FP&A, spend management, AP/AR, bookkeeping, and equity management.
A hot take
There's a truism in tech that finance people are notoriously difficult to sell into. I disagree. I think they have real budgets to deploy but are extremely discerning and will only buy new products that definitely make their lives easier. Most tools today don't. They are point solutions that are really narrow and are doing their thing well, but not making finance teams lives easier because they're focusing on a “nice to have” improvement versus a “must have need”. So much of what finance does is highly interconnected, not only within the function, but also across it. And so the MVP required to get traction is significantly higher than in other places.
Prediction for the winner in the space
Most core finance products are really heavy and feature rich. Coupa, Oracle, Workday, the list goes on. So while this is a pro and con in purchasing decisions, the reality is that these products have so many features and modules that a startup can't build all of them from day one.
My strong belief is that the only way to win is to find a wedge that's so acute that teams are willing to buy a point solution that's incremental to their stack. If it's a burning need, it means that they'll buy a net new product to solve it. And then the company can expand its offering over time to replace others.
Companies on the rise
Appzen and Onplan in the Redpoint portfolio are doing some really interesting things. Appzen is making compliance much easier for finance teams when it comes to auditing expenses, and Onplan is supercharging FP&A teams while enabling them to continue to work in the format they know best - Excel or Google Sheets.
What am I most excited about?
I'm obsessed with the ERP market. It's absolutely enormous. It's a ~$50 billion market where we haven't seen any substantial new players in decades. It's a really hard problem because ERPs are really core and far reaching systems in any company, but I wonder if it's possible to unseat the large incumbents like NetSuite with a vertical sized approach targeting the needs of a specific type of business. We've seen a handful of vertical SaaS companies do this, and I think it's just the beginning.
What do you want to see?
I rarely see companies iterating in treasury management. It feels like a huge opportunity to help companies manage cash flows, yields and risk in such a dynamic and inflationary environment as we have today. I've heard widely diverging views on whether there's enough of a need, but I continue to believe there's room for a software solution that CFOs would adopt if it solved enough of their problems in a low lift yet low risk way.
Check out the previous episodes if you haven’t yet:
Thoughts on this format? Would love to hear your take. If you’re not subscribed already, do so below for future videos and posts.
B2B Financial Management & Workflows (Video Series Part 5)