Numeric grabs $28 Millions Series A to automate accounting using AI
- 13/10/2024 09:43 AM
Month-end and quarter-end closings are often dreaded by accountants. The process of finalizing financial records can be a tedious, error-prone, and time-consuming manual task. But in 2020, Parker Gilbert, who was managing finance and accounting at a startup, got so frustrated with the inefficiencies of the traditional approach that he co-founded Numeric, a software platform aimed at automating key parts of the book-closing process.
Several years later, the rise of generative AI significantly enhanced Numeric’s capabilities. Today, companies like Brex, OpenAI, Plaid, and Wealthfront use Numeric to streamline their accounting processes. Numeric has seen impressive growth, with its revenue increasing fourfold in the last year to reach single-digit millions. This success has captured the attention of investors, and the company recently secured $28 million in Series A funding, just five months after raising $10 million in seed funding. The Series A round was led by Menlo Ventures, with new backers IVP and Socii joining previous investors Founders Fund, Long Journey, 8VC, Friends & Family Capital, and Fifth Down.
How Numeric Works
Numeric helps accounting teams save days in their monthly book-closing process by automating data aggregation and reconciliation from various accounting systems and Excel spreadsheets. It then uses an AI agent to analyze and explain changes in line items from the previous month. This automated process, known as flux analysis, quickly identifies any unusual variations and provides explanations. For instance, if the AI agent notices that legal expenses were higher in October compared to September, it would offer a detailed explanation such as, “Your legal expenses increased this month because you paid Wilson Sonsini $X more for your funding.” This insight saves accountants hours of manually reviewing and documenting variances in accounts.
The use of AI in this process has sparked concerns about the potential for AI hallucinations, where the AI could generate inaccurate or misleading commentary. However, Gilbert, Numeric’s CEO, reassured users that this issue has been carefully managed. Numeric includes links within its reports, allowing accountants to verify the AI agent’s work, ensuring transparency and accuracy.
While Numeric’s current model doesn’t rely on generative AI for the actual calculations and tie-out process, Gilbert envisions that this capability will be added soon. He believes that large language models (LLMs) are already very good at synthesizing large amounts of data, and they are only going to improve in accuracy and efficiency.
A Competitive Edge in Accounting
Croom Beatty, a partner at Menlo Ventures, explained his interest in Numeric by highlighting the company’s unique position in the accounting software market. Having spent significant time looking for a company that could disrupt the accounting sector, he found Numeric to be one of the first startups to capture his attention. He noted that Numeric’s ability to combine complex workflows with equally complex data gives it a significant competitive advantage. In a market that has traditionally been underserved by technology, Numeric’s innovative approach makes it stand out.
Beatty also sees a bright future for Numeric, predicting that the company could expand its offerings to include financial planning and analysis tools, a market currently dominated by Anaplan. Numeric’s growth potential is fueled by its strong foundation in accounting software, a space where it competes with established players like BlackLine and FloQast. FloQast, for example, is an 11-year-old startup that was valued at $1.6 billion during its Series E round in April 2023.
Why Numeric Stands Out
While the accounting software market is not devoid of competitors, what Numeric is doing with AI is difficult to replicate. The company’s approach to merging AI automation with traditional accounting workflows is complex, but this complexity is also what makes it highly effective. It’s not just about speeding up the book-closing process; Numeric also ensures that its AI provides accurate, meaningful insights that accountants can rely on.
With the backing of major investors and the growing use of AI in financial management, Numeric is well-positioned to further disrupt the accounting software market. As AI continues to evolve, and as Numeric integrates more advanced features into its platform, the company could transform the way businesses handle their financial processes, making them more efficient, accurate, and less dependent on manual labor.
In a world where time is money, Numeric offers accountants and businesses a way to save both, ensuring faster month-end closings and smarter decision-making. By using AI to simplify and enhance the traditionally cumbersome book-closing process, Numeric is charting a new path forward for the future of accounting.
