When Finmark founder Rami Essaid built a previous startup, he saw firsthand how hard it is to build accurate financial models. When he sold that startup, Distil Networks, to Imperva 2019, he decided to build a new company that could help.
Finmark, which launched in July 2020, helps companies build sophisticated financial models without having to use Excel. “We had a thesis around helping startups from pre-revenue to pre-IPO build out financial models and get out of Excel,” Essaid explained to me.
He said they initially concentrated on really early-stage companies, startups that hadn’t raised yet or just snagged a seed round. There was a reason to keep the target market in that range — the models were less sophisticated, enabling Finmark to build the first iteration of the product faster.
The approach worked. Essaid reports that over 1,000 companies are using the product, of which about a third are paying customers. This early success pushed them to move further upmarket to medium-sized companies with between $5 million and $75 million in revenue with more complex modeling needs.
“We just crossed over being able to close some of those deals and bringing some of those larger companies on board. And so we’re continuing to build more sophisticated features into the product, and continuing to try to make it easier for founders to manage their finances without any help, even when they don’t have a sophisticated financial person in-house,” he said.
The company came out of Y Combinator last year, giving Finmark access to a bunch of startups that need its services, allowing it to refine the product with their input.
Today the company is working with other incubators and venture capitalists to offer the program for free or at a discounted rate for three to 12 months. That’s helping drive usage and raise product awareness.
The company also invested a lot of money into creating content to help early companies understand how to build more accurate financial models to make sure they don’t run out of money, which Essaid points out is the main reason that startups fail.
“The number one reason that startups fail is that they run out of money. Very few startups actually just shut down, right? If you know how much time you have left, that gives you more optionality. Understanding this stuff and planning more strategically to make sure that you don’t run out of money is, I think, a key component to making sure that startups get successful.”
The company already has almost 35 employees, so he’s ramped up quickly. It helps that he had another startup, allowing him to draw on that network to find people he knew and trusted, but he also wants to add more diversity.
“I gave it a lot of thought [to diversity] after we talked about it last time and one of the things that’s great about this time around for this company is that we’re building it remotely, so I have access to more diversity across the country than I did when I had my headquarters in San Francisco before, because that was such a homogenous environment,” he said.
The company raised $6.5 million for this tranche of seed money. The round was led by American Express, joined by existing investors Draper and Associates, Bessemer Venture Partners and IDEAfund. It previously raised $5 million in the first part of the seed investment.