Ledge aims to build automation tools for finance teams • TechCrunch

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The rapid adoption of digital payments has become a major challenge for finance teams. According to one report, teams spend as much as 40% of their time processing transactions. To blame is different, unstructured data, they say. In a separate survey, 48% of teams cite fragmented data as the biggest obstacle to closing their books.

Tal Kirschenbaum is well acquainted with the struggle. He worked at Melio, a business-to-business (B2B) payment platform for small companies, where he saw finance teams becoming victims of their own success.

“Some companies have payments expertise and are able to invest R&D resources in building good internal solutions to deal with the problem, but that’s not a feasible option for most companies,” Kirschenbaum told TechCrunch in an email interview. “Finance teams are forced to work as ‘human glue’ to hold together a complex payments stack of payment processors, banks, enterprise resource management platforms, databases and more.”

That led Kirschenbaum to co-found fintech startup Ledge with Asaf Kotzer and Ariel Weiss in 2022. Through Ledge, he hoped to empower finance professionals to better handle day-to-day tasks like monitoring and alerting, while providing them with strategic insights to boost their bottom line .

Ledge automates multi-way reconciliation, ensuring that a company’s internal records of payments due and overdue match the transactions shown on bank statements. That too enables real-time accounting, and updates the overview of all a company’s accounts by connecting to existing ones data, payments and banking infrastructures.

“Ledge’s big data pipeline aggregates and normalizes data from multiple sources,” Kirschenbaum added. “The platform’s AI supports predictive rule building and smart matching as well as insights and forecasting. And it offers pre-built integrations plus a drag-and-drop interface that can be set up by finance teams in hours.”

From Ledge’s dashboard, businesses can view aggregated balances across accounts and financial service providers. They also get AI-powered recommendations on how to optimize payments and spending.

“Ledge learns how finance teams operate to automate their operational activities and gain insights from their payment activities. This type of learning is often about identifying either patterns or anomalies (e.g. a failed payment),” explained Kirschenbaum. “Additionally, Ledges enables access to datasets for both inbound and outbound transactions across business models and industries cash flow forecasting and optimization of financial management on a day-to-day basis.”

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It’s early days for Ledge, which Kirschenbaum says has only a handful of customers at the moment. But he sees the company as standing alone in the thoroughness of its offer.

“Finance teams that handle a high volume of digital payments and complex payment stacks have been really underserved by the market until now, so our main competition is mostly status quo – namely finance teams that need to manually compile huge amounts of data from multiple sources into a spreadsheet, Kirschenbaum said. “There are solutions on the market that try to solve this problem, such as Modern Treasury, Moov and Sequence, but instead of being tailored for finance teams, most are instead API-led and rely on R&D teams to implement and maintain. They also tend to target fintech companies which are inherently more payment savvy than most other companies and primarily focus on automating the movement of money.”

The investors apparently agree. Ledge this week closed a $9 million seed round led by NEA with participation from Vertex Ventures, FJ Labs and Picus Capital. With the infusion of new cash, Kirschenbaum says Ledge will introduce greater financial management capabilities, improve the platform’s algorithms, bolster customer acquisition efforts and grow the company’s workforce.

Ledge no doubt benefited from the increased cross-industry interest in financial automation technologies. According to a recent Gartner survey of CFOs, one-third said they will prioritize investments in back-office automation technologies over the next year.

Investors are betting that financial fears will prompt companies to redouble their efforts to control spending, boosting demand for automation tools. According to Pitchbook (cited by The Wall Street Journal), startups making AI-powered accounting software raised $233.3 million in venture capital between January 2022 and the end of March 2022, surpassing $210.2 million in funding for all of 2021.

Said New Enterprise Associates partner Jonathan Golden in an email: “As an increasing percentage of B2B payment volume flows to digital channels and the number of businesses with complex cash flows increases, tools to reduce the workload of the finance team become a necessity … Ledge is built by finance experts for finance teams; we believe the founders are ready to meet this challenge, as they have faced the problem themselves.”