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From the early stages of pre-seed funding to a large scale-up, financial technology (FinTech) is reshaping how companies manage their finances and drive growth. During a company's lifetime, this technology undergoes significant changes, with each stage presenting its own requirements and challenges.
To understand how the financial tech stack evolves over time, we sat down for a one-on-one conversation with David Wiesneck, VP Finance at Demostack. We covered the processes that drive technological advancements at each stage, how to ensure that all systems in your stack are fully integrated, and how to choose the right solution for your stage and needs.
If you want to gain insights into how to build the right financial tech stack for your company, keep on reading!
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In the early days of a tech company, it's all about laying the groundwork. You have between 1 and 10 employees at this point, and your finance tech stack is pretty straightforward. We're talking basics: a bank account, a payroll system, and a trusty General Ledger system. QuickBooks tends to be the MVP here, a go-to choice for many startups.
When it comes to paying employees, platforms like Gusto and Justworks come in handy. Gusto offers that special touch for early-stage companies, while Justworks offers a solid PEO experience, smoothing out employer risks.
Selecting a bank might sound mundane, but it's crucial. Technology-enabled banks like Mercury and Silicon Valley Bank (SVB) are popular because of user experience. They offer seamless integration and top-notch service for startups.
Invoicing is pretty simple at this point since there are not many customers. Whether we're using your GL or Google Sheets to generate invoices, it's still manageable.
Fast forward a bit, and your team has grown to about 10 to 50 employees. Now, it's time to upgrade our finance tech stack. We're talking spend management systems like Ramp, Brex, and Bill.com, which make it easy to handle corporate card payments and vendor bills.
Then there's invoicing. Once you reach this stage, it's a whole new world of paperwork. That's where platforms like Maxio and Received come into play. This helps you streamline your entire billing process, while keeping your finance team lean and mean.
So now you've raised to series B or series C, you're somewhere between a 100 and a 1,000 employees. Now is the time to think about scale. We're talking about control processes, enterprise software, and a growing finance team.
At this stage, you'll discover a whole new world of tools. When managing accounts receivable, consider factors like tax and close management software. Also, your finance team is no longer just a handful, but around 7 or 8 people. This growth will facilitate specialization, which means you will need new tools for specific finance functions.
Once you're a scaled company—think 1,000+ employees, eyeing an IPO, or already public, it's time to look at enterprise platforms. Move away from QuickBooks and upgrade to the big leagues with software like NetSuite or Intacct for your general ledger needs.
Scaled companies have fewer fluctuations in their processes from month to month or quarter to quarter. By now, you've got your systems in place, and it's time to streamline like a pro. Automation is your new best friend, helping data flow seamlessly from beginning to end.
Integrations have two approaches. The first is vendor-built integration, where the integration is built and managed by the vendor itself. The second approach involves self-built integrations, either using tools like Workato or Zapier, or building the integration from scratch with a developer and API.
Vendor-built integrations are fast and reliable. As they are owned and managed by the vendor, setup and maintenance are handled. Plus, users benefit from shared knowledge and development costs with other clients. The downside is that if the vendor stops supporting or updating the integration, users may be left with limited functionality. Additionally, standard integration may not accommodate certain peculiarities in data flows.
Self-built integrations offer more customization and autonomy. Businesses can tailor the integration to their specific workflow and data needs, offering flexibility and control. The downside is that this approach requires ongoing support and investment in development.
Searching for the right software has multiple methods. First, standard approaches like online research and utilizing platforms like G2 or Gartner can help you identify top solutions. It's also a good idea to leverage your professional networks for recommendations, but take those with a grain of salt as each company has its own individual needs.
Evaluating the vendor's long-term viability is crucial, including understanding their roadmap and investment in research and development. Ultimately, the decision involves not only evaluating the software's functionalities but also the company's stability and commitment to innovation, ensuring alignment with your company's trajectory for the next 12-24 months.
From pre-seed to scale-up, the evolution of a company's tech stack requires strategic decision-making and adaptation. The right tools and platforms are crucial at each stage to support growth and streamline financial processes.