Digits posts $65 million on a $565 million valuation to provide a more dynamic, automated approach to legacy accounting tools – businesstraverse.com

Digits, the startup developing a new take on accounting software through an approach described as building a “living model” of a company’s financial operations, has raised some of its own funds to double the growth of its company. The company has raised $65 million, a Series C that CEO and co-founder Wayne Chang has confirmed to me is worth $565 million.

Digits has been in an invite-only phase until now after first launch from stealth mode and amassing an impressive waiting list of 16,000 (and $97.5 million in funding). But today, to coincide with the funding news, it is launching what it describes as its first product: a reporting tool called Digits Reports. Reports allow users — typically accountants or other finance professionals — to hover over accounting rules to get deeper analysis and visualizations to put a transaction in better context. (“Hover to discover!” is the catchphrase Chang almost sang to me when describing how it worked.)

Figures will also open the doors a little wider to add more users. Right now, it’s intentionally working with “just a few hundred,” Chang said, to learn its algorithms and learn about the different usage scenarios that can arise with customers.

SoftBank’s Vision Fund leads the financing, with UK investor Harry Stebbings’ 20VC Growth, GV and Benchmark also participating. GV and Benchmark led the previous rounds, respectively, which now total $97.5 million.

Digits has taken a very cooperative approach to collecting lenders: it counts 72 individual angels on his dressing table. Part of Digits’ appeal (and traction) was its founders’ track record: Chang and Jeff Seibert also founded Crashlytics, the crash reporting service first acquired by Twitter, which then sold it to Google, which integrated it into Android. It is now used on billions of devices and millions of apps.

You might be wondering what the line is between building tools that are very developer oriented and building an accounting platform, but as Cheng describes it, the connection was clear to him and Seibert.

“There are direct parallels,” Seibert told me. “At Crashlytics, we were focused on the product and developer side of the house, where it’s all about analytics on how apps are performing. Processing massive amounts of data allows teams to gain insights they didn’t have before. But we were shocked by how little visibility the companies had of their [overall] company.” Figures, he said, “used a very similar approach, but applied to the other half of the company.”

That ethos is evident in the products the company builds.

Digits itself is not a data recording tool: Chang notes that it essentially sits on top of Intuit’s Quickbooks (note: that choice was a conscious one because Quickbooks today accounts for about 80% of the small accounting software market. companies in the US, although Digits will work with other sources over time as demand dictates). It then uses that data, plus API-based integrations with everything else a business uses to manage money in and out in its business, to essentially create a massive database of information.

Digits then begins to organize and read that data to create more intelligence around it. In the case of the new Reports product, it provides automatic answers to the kinds of “how” or “why” questions an accountant or other financial professional might have around a basic financial report, the kind of answers previously only possible by human resources. questions and being able to read and understand the stories behind paper paths and locked data sources.

Digits Reports will run alongside and is based on a search function Digits launched last year to help users find transactions that align with a similar idea: answers aren’t just found through keywords, but in results that feel (heh) what the finance pro is trying to do. really find out.

You used to have to search filing cabinets and even shoeboxes,” Chang said, insisting he wasn’t being overly dramatic. “This whole industry is very outdated.”

Right now, the company’s products focus on querying historical information: looking at financial transactions and other events that have already happened to understand them. But the obvious progression from this is to apply Digits’ Living Model to real-time analytics — and more relevant to finance folks — future reporting. (Another startup building next-generation financial tools for smaller businesses, DataRails, aptly calls future reporting and modeling the “holy grail” for these financial professionals.)

Change confirmed that this is definitely at stake for the company, but declined to say more.

However, when I shared his screen with me to demonstrate the “hover to Discover” tool, I noticed another product on Chang’s desktop that he quickly removed from saying it was still being worked on.

It was called “Burn”, and my educated guess is that it may have to do with giving a user – most likely from the smaller businesses Digits focuses its service on – to see how a company’s cash flow is over a period of time. behaves, to determine its runway and burn rate over that time. This, in turn, can help a company figure out where it might need to spend less (or maybe more) if it needs those numbers to move in a different direction, or vice versa if it has the capacity to invest money to stimulate the activity.

What’s also really interesting about the Living Model is that it can be applied on a more general level to more than just accounting questions, because it gives a complete picture of how a company operates financially. Chang told me that Digits has already turned down three acquisition offers since its launch in 2019.

He declined to specify who made the approach, but confirmed that not only other, larger accounting platforms are interested.

“We know we’re building some pretty compelling technology that nobody else has,” he said, “and the Living Model applies to other things. For example, if you’re a bank and want to apply different loan models, our platform can automatically inform you about the financial condition of a company. We are just scratching the surface of what we can do.”

For now, it is finding enough traction from the accounting corner, where users are rapidly migrating to more digital tools and looking for more automation and insights into their experiences. That also helped Digits get them to sign up for his product.

“Business owners have given very little thought to these kinds of things, only when there’s been a question like ‘why was this over budget?’ this is how he characterized the traditional way of thinking that seems to be evolving.

And this is why investors want to jump in.

“It’s rare for one of our portfolio companies to be valuable to the others,” said Eylul Kayin, an investor with SoftBank’s Vision Fund. “Numbers are helpful to all of them.”

Shreya Christinahttps://businesstraverse.com
Shreya has been with businesstraverse.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesstraverse.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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