Israel-based DataRails closed an $18.5 million Series A after pivoting the business from a data integrity and compliance platform into a financial planning tool early last year.
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The new funding was led by the Zeev Ventures Fund, with participation from existing investors including Vertex Ventures Israel, Innovation Endeavors and additional private investors. The 60-person company now has raised a total of $28.5 million.
Founded in 2015, DataRails began its life trying to position itself as a data compliance solutions platform for the financial services sectors. Then early last year, the company realized it could use its data technology as a financial planning tool for the small and medium-sized business segment of the market — where most rely on simple spreadsheets to keep track of financial reports, budgets and forecasts.
“They are serving a segment of the market that was underserved or not served at all,” said Oren Zeev, founding partner at Zeev Ventures Fund.
The company’s pivot allowed DataRails to grow from a handful of clients to “hundreds of customers” in just about a year, said founder and CEO Didi Gurfinkel. In addition to the growing customer base, the company grew its ARR fivefold in last year after the launch of their new product.
Part of that growth is due to the low barrier for adoption, Gurfinkel said. The DataRails platform allows SMBs to continue to use spreadsheets, but it stores the data in the cloud — making it easily accessible and user friendly, he said. When the user needs to update the financial data, it can be downloaded back into a spreadsheet such as Excel.
“Instead of replacing the spreadsheet, we put Excel into more of an enterprise structure,” he said.
The “very low friction” for adoption of the product was one of the main reasons he wanted to invest, Zeev said.
A wide open market
Zeev added that he was intrigued by how much of an “open blue ocean” the market is in the SMB sector, as large financial planning platforms such as Adaptive Insights — which was bought by Workday in 2018 for $1.55 billion — and Anaplan typically serve large enterprises and require companies to overhaul their current financial planning process tools.
Gurfinkel said with more than 300,000 SMBs using Excel to manage their financial planning tasks, the market is unlimited for DataRails. The company will use the new funding for sales and marketing, looking to grow in both of its main markets — the U.S. and U.K.
Zeev said while no one can tell the future, he has significant faith DataRails can become a dominant player in the sector.
“I would have no interest if this were something I thought we were just going to turn around and sell,” he said. “The objective is always to build a big company.”
Illustration: Li-Anne Dias.
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