There has been an explosion in the number of software firms targeting the office of the CFO in the past few years. In the enterprise and upper mid-market, we have seen an unbundling of the financial functionality that previously formed a large surface area of ERP (enterprise resource planning) systems.
Organisations are shifting a larger portion of their investment into best-of-breed vendors that can help drive efficiency, control and automation through their finance functions – from planning, through operations to tax and reporting. For Europe’s SMEs, there is also an increasing range of choice between payables, receivables and cloud-native accounting systems.
Whilst many of these vendors in this space have started with an entry wedge product, they have generally sought to expand into adjacent functional areas over time to build broader platform offerings. A good example are expense management players that have broadened into broader spend management, payables and later procurement.
At the same time, the role of the CFO is evolving. Finance leaders are poised to take a wider strategic role in data-led organisations. Where success was historically measured by the efficiency of the month-end close, the potential to move towards a more real-time financial view – with insights driving the wider organisation and operations – seems increasingly realistic.
And yet, on the ground, finance teams in organisations of all sizes are still struggling with first order problems including fragmented data, inefficient processes and limitations in underlying financial infrastructure that create the need for burdensome manual interventions. This all prevents them from spending time on higher-value work or realising automation at scale. To that extent, we expect AI to become increasingly central to both the mechanics and user experiences of platforms building in this space delivering improvements in forecasting, financial decision-making and automating those many workflows in the finance department that require both unstructured and structured data processing.
And we’re also excited by the value that will be created by companies that can successfully address the wide and diverse mid-market in the coming years. In this segment, companies have grown significantly in complexity but lack the scale or resources to deploy, integrate and maintain enterprise-focused platforms. An increasing need to handle multi-entity and multi-geo operations are more often additional challenges to be addressed. These businesses remain underserved by the current landscape of vendors, but we are starting to see a cohort of platforms and talented founders building with this segment in mind in areas including the general ledger, treasury, procurement and financial planning.
If you’re a founder innovating in this space, please do get in touch with: dan@dawncapital.com, mina@dawncapital.com, zoe@dawncapital.com and skye@dawncapital.com.
