Finaloop is the only e-commerce-tailored, real-time, and 100% accurate bookkeeping solution. Pulse 2.0 interviewed Finaloop CEO Lioran Pinchevski to learn more.
Lioran Pinchevski’s Background
Pinchevski’s path to where he is now has been interesting. “By trade, I’m an accountant and a tax lawyer. I started in a law firm and then moved to PwC NY and Tel Aviv, eventually becoming a tax partner in their M&A and International Tax practice. There I worked with large enterprises on building sustainable and efficient business structures,” said Pinchevski. “Throughout that, I was always working on side hustles to feed my need to build something. I sold my first small venture in 2009. In 2018, I founded a now 7-figure DTC brand in the fertility space. That experience of running an e-commerce brand was when I became completely immersed (and borderline obsessed) with the e-commerce space and was when the need for a company like Finaloop became crystal clear to me.”
Formation Of Finaloop
How did the idea for Finaloop come together? Pinchevski replied:
Finaloop was born from my pains of running my own DTC brand. As an accountant, I’ve always known how crucial it is for business owners to be on top of their finances and cash flow.
However, I immediately noticed that traditional bookkeeping simply couldn’t keep pace with e-commerce businesses, and there wasn’t any financial solution to help me. The only option available to me and to fellow DTC brand owners was to outsource my bookkeeping. Still, I found that traditional bookkeepers using Quickbooks, Xero, or even Netsuite couldn’t provide me with the numbers I needed to manage my e-commerce business. Whatever they did provide me was continuously delayed and full of mistakes.
It was a constant struggle. Constant waiting, constant phone calls and emails explaining e-commerce to my bookkeeper, and still a constant lack of the numbers I needed.
I realized the huge opportunity here to solve this pain point of every DTC and e-commerce brand owner. While my tech experience was limited, I couldn’t ignore the bigger opportunity of combining the traditional world of accounting, financing, and tax with the progressing world of e-commerce and DTC.
After getting funding from Accel and other visionary investors, my co-founders and I gathered an “A team” of engineers, tax accountants, designers, financial analysts, and e-commerce experts, and Finaloop was born.
Favorite Memory
What has been your favorite memory working for Finaloop so far? “My driving force is to eliminate this pain point for e-commerce brands. We’ve had a few wins along the way, but I never really allowed myself to enjoy them because, in my opinion, there was still so much work to be done,” Pinchevski reflected. “Once the positive feedback and suggestions for new features started rolling in from customers, I remember this feeling of realizing that our customers weren’t complaining about a missing feature or bug but were genuinely invested in this product because they already see the benefit and are excited that they finally have this financial visibility. That feeling of realizing we are building with our target customers rather than just for them is extremely motivating.”
Challenges Faced
What are some of the challenges you face in building the company, and has the current macroeconomic climate affected the company?
“Creating a culture that includes both finance people combining with tech people. The backgrounds and work methods of the two are completely different. It took some time and adjustments before we could truly create a process that resulted in the two groups working together to create an amazing product,” Pinchevski acknowledged. “Regarding the macroeconomic climate, the effect has been twofold. As a tech startup, of course, we feel the pressures of the current economic climate and its impact on future financing rounds and on growing the team. On the other hand, the economic downturn has resulted in e-commerce brands finally understanding the importance of keeping their finger on the pulse of their financial health. No one wants to be caught by surprise, and the need for real-time financial visibility is three times what it used to be.”
Core Products
What are Finaloop’s core products and features? “We replace the bookkeeper, accounting software, and app integrations for e-commerce. Finaloop’s e-commerce bookkeeping service uses AI technology and e-commerce-focused expertise to reconcile financial data in real-time fully, providing e-commerce and DTC brands flawless books, optimized tax returns, and actionable insights 24/7,” Pinchevski explained. “Features include real-time sales channel integrations, accrual/cash basis flexibility, real-time P&L, cash flow, and balance sheet, real-time inventory and COGS (Cost of Goods Sold) tracking, and AI-driven expense categorization, together with expert review and support from a dedicated and responsive bookkeeping team.”
Evolution Of Finaloop’s Technology
“Honestly, the technology has taken a lot of exciting turns, many of which I didn’t initially envision, but I love to see the exponential improvements and customer reactions along the way. For example, in the beginning, we layered our technology on top of commercially used accounting systems,” Pinchevski noted. “It quickly became clear to us that to give brand founders the e-commerce-tailored data they need; we needed to create our platform rather than trying to work with inherent limitations that arise when dealing with non-e-commerce accounting software. Once we realized this and built our accounting platform, our capabilities, and the results skyrocketed because a third party’s limitations no longer limited us.”
Significant Milestones
What have been some of Finaloop’s most significant milestones? Pinchevski replied:
We have had quite several significant milestones since being founded in 2019.
The first was reconciling sales data at scale across multiple sources, platforms, and currencies in real-time.
Another was the release of our real-time cash flow. This was one of the biggest pains for e-commerce founders – brands are dying because of inadequate cash flow management, and now they finally have the visibility to manage this critical process better.
Most recently, Finaloop launched a real-time, automated COGS (Cost of Goods Sold) tracker—solving one of the most significant pain points e-commerce brands face—accurately tracking their COGS, gross margin, and contribution margin, which also helps them budget and monitor their performance marketing spend—integrating this directly with their bookkeeping. The trackers allow complete financial visibility without waiting until the month is over—something they can’t get from traditional bookkeepers. It’s the first kind of its system – combining both into one native system.
Until now, DTC and e-commerce operators have put up with inaccurate COGS and completely outdated books from bookkeepers who simply can’t keep up with the pace of e-commerce. We see it a lot, and I experienced it myself when I founded my own DTC brand. The result has been inventory mismanagement, incorrect pricing decisions, and unreliable financial reporting. The new COGS feature finally provides DTC and e-commerce operators with the holy grail of accurately tracking their real-time COGS, enabling them to have a clear understanding of their financials at all times and to make smarter decisions.
Customer Success Story
When I asked Pinchevski about a customer success story, he said there are many, but one that sticks out is Ronak Shah, CEO and Co-Founder of Obvi, an 8-figure DTC brand.
“I first spoke with Ronak over a year ago when he, coming from an accounting background as well, was increasingly frustrated that he couldn’t trust the numbers he was getting from his bookkeeper. He spent hours each month gathering the financial data he needed to make decisions since he had no real-time visibility and reliable numbers available,” Pinchevski highlighted. “After I told him what Finaloop does, he was, of course, skeptical. I offered him to sign up for free and compare the accuracy of Finaloop’s data with the data he received from the bookkeepers he was using. He agreed, onboarded in 10 minutes, and within 24 hours without any form of payment, Finaloop reconciled and categorized all his financial data. After that, he became a believer and one of our biggest advocates.”
After almost a year of working together, Finaloop helped Obvi:
— Save over $65,000 on bookkeeping and Fractional CFO costs.
— Reduce the time they spend on monthly bookkeeping by 94%.
— Negotiate 8.3% cost reductions due to more precise data for negotiations and easy views into unnecessary expenses.
— Eliminate the mental load that comes with not trusting their numbers.
“We also had big success with many other high-profile brands such as Doe Beauty, Huron, Tabs Chocolate, Strolleria, Duradry, Clutch, and Magic Brands,” Pinchevski continued.
Funding
Can you discuss funding and how the company generates revenues? “Finaloop raised $15.2 million in seed funding at the end of 2021 with investments from Accel and Aleph, taking the company’s total funding to $17 million. We’re making money as a SaaS company from subscription fees,” Pinchevski revealed. “We’re also able to recoup much of our marketing budget by catching up on historical books for new customers and charging for it. Using our software, we can catch up on a full year’s worth of books in about 24 hours, so we can provide this to the customers for significantly less than what they would pay any traditional bookkeeper or bookkeeping service.”
Total Addressable Market
What total addressable market (TAM) size is Finaloop pursuing? “Literally every e-commerce, wholesale, or multi-channel retail brand is a potential customer of FInaloop. TAM is the entire modern retail world in the US, soon to include Canada and the UK,” Pinchevski assessed.
Differentiation From The Competition
What differentiates Finaloop from its competition? “Finaloop is the only e-commerce-tailored, real-time bookkeeping solution of its kind. Some companies try to do specific parts of what we do, but no one that created one integrated solution built for e-commerce as we have,” Pinchevski pointed out. “Our competition is traditional (human) bookkeepers. It’s what people are used to. Since, unlike us, they really believe they are irreplaceable, they sometimes can also convince the brands. The main challenge in creating a new category is educating the market about why this change is needed.”
Future Company Goals
What are some of Finaloop’s future company goals? “We are working towards adding even more valuable KPIs that will help e-commerce businesses budget and monitor their most important spend—ad spend and become data-driven about this and not manage by gut feeling,” Pinchevski concluded. “We’re also building financial segmentation options to help them break down their P&L into different segments, such as selling channels, activities, currencies, geographics, etc., for better decision-making. We also plan to add more cash flow and inventory management features.”
