Will software for CFOs create a bright spot in a battered fintech market?

The comedown from the venture capital boom of 2021 has shaken up much of the startup world, but the dearth of capital has shown up sharply in one particular niche: fintech.

CB Insights data indicates that after reaching a peak in 2021, funding to fintech startups across the world dropped a drastic 46% to $75.2 billion from $139.8 billion a year ago. Early 2023 data is still trickling in, but we’ve yet to hear from anyone that venture funding to fintech will rebound. Yes, Stripe’s $6.5 billion raise might skew tallies somewhat, but let’s not forget that it’s also a down round.


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But fintech is broad, encompassing everything from Chime and Alpaca to Brex. In fact, it’s nearly too broad a group to be of much use. You have to dig deeper and be more specific to get a clearer picture of its evolving trends.

This brings us to CFOs, everyone’s favorite person in a company’s executive team: The naysayer, the demander of receipts, the fussbudget of budgets.

Call them what you will, CFOs are a critical part of a startup’s evolution. We don’t pay enough attention to CxOs here at TechCrunch, as we’re a bit more focused on founders, but last year, CFOs managed to breathe their way to our attention: TechCrunch reported about a wave of CFO turnovers at companies that had been on the IPO track before the market blocked that path or took the business down a peg.

That’s the bad news for CFOs: Changing valuations in many startup categories took IPOs off the table, and they are now tasked with stretching cash as far as it can go in a market where capital dried up faster than a puddle in Death Valley.

But there’s good news as well: Lots of fintech startups are building tools for CFOs and their larger office, often called “the CFO stack.”

Subscribe to TechCrunch+The grouping is, like fintech itself, a collection of smaller tools. An a16z post on the CFO stack from 2020, for example, broke the collection into groups like financial planning and analysis (FP&A), tax and treasury management, procurement, monthly close software, payroll, equity management, billing, payment processing and employee expenses. It’s a big basket.

This has some venture capitalists really stoked: A recent TechCrunch+ survey of fintech investors turned up fresh notes on the category in 2023.

Aunkur Arya, a partner at Menlo Ventures, said that his firm’s thesis in fintech has stayed stable of late. The venture group is “investing in developer infrastructure and embedded finance APIs, vertical banking, end-to-end consumer and business financial services, and the Office of the CFO.”

But why the sudden interest in making CFOs lives easier? “There is still so much heavy lifting to be done by accountants, engineers and finance teams to reconcile and close books, understand operational and financial data, and keep up with constantly changing business models and compliance surface area,” Arya explained.

Miguel Armaza, co-founder and a general partner at Gilgamesh Ventures, agreed. In the same survey, Armaza said that his firm was excited by “capital-light business models that truly leverage the deflationary power of technology,” making them focused on startups “building software for the office of the CFO, SMBs and financial infrastructure.”

Not every venture capitalist is as bullish, though. Ansaf Kareem, a venture partner at Lightspeed, said in the survey that “the ‘CFO stack’ has been a constant area of discussion among fintech investors, but it doesn’t seem to have played out in a meaningful way yet.”

Why is that the case? In his view, “there have been constraints in the space, especially driven by the differing customer segment needs, go-to-market strategies and incumbents across SMB, midmarket and enterprise.”

Understanding the divergence in views

Why are some investors excited about the very opportunity that others describe as overplayed?

Paul Bianco, CEO at Graphite Financial, an entity ​born out of a VC fund that provides startups with accounting services and outsourced CFO support, explains that his company is keeping tabs on the CFO stack because it sees it making CFO jobs better not jeopardizing them.

“We view all these new technologies as a superpower versus a replacement,” he said. “CFOs can combine and visualize data from disjointed sources, run scenarios and understand nuanced financial information faster than ever. This allows them to spend less time on tactical work and more time on strategic work.”

That’s exciting, but Bianco adds an important caveat: “If there is any limitation, it’s that it takes a lot of understanding, time and energy to get up and running on something new. Someone still needs to understand the need and the inputs, and make sense of the outputs.”

That hurdle to acquiring customers is not uncommon for B2B services. Is that hurdle showing up in fundraising data? Not yet, but that may change this year.

What does the data tell us?

Thankfully, there’s a good bit of data for us to look at. In its year-end look at enterprise fintech, PitchBook collected data on investments in the CFO stack (defined as accounting, tax and compliance software, along with tools for budgeting, forecasting, expense management, accounts automation, payroll and earned wage access) in the past few years.

Predictably, there was more capital at play at startups that fit the “office of the CFO” bill in 2021, with investment reaching $9.0 billion, up sharply from around $2.9 billion in 2020. But we think it’s more interesting that the amount of funding to these startups ($6.9 billion) declined only 23% in 2022 since last year, which is half the percentage decline we saw in fintech more broadly.

This indicates that VC’s optimism bore out through 2022 at least. TechCrunch+ worked this morning to recreate PitchBook’s data set for CFO software startups, and we actually got a little close. We wound up with a set of companies that had a very similar funding arc, albeit with more dollars and rounds included than PitchBook’s presumably more tuned analysis of their own information.

We share that little detail because our search (which seems to overcount generously while looking at a partial dataset for Q1 2023) indicates that CFO-related startup investment in 2023 is off to a slow start.

Naturally, in any sort of rough-edged analysis like this, we are looking more for directional hints than hard numbers. It appears funding for CFO-related startups is likely in the low hundreds of millions so far this year, and unless we see a massive funding round, 2023 is going to start on a cadence that will see funding for CFO-focused tech companies crash spectacularly.

The data also shows that historical optimism around the CFO stack led to a massive wave of venture capital activity. The issue is that while some VCs are still bullish, there is far less data than before to indicate that that hope is converting to conviction, and therefore, financing.

Here’s a more optimistic take based on what we’ve seen recently: Since CFO-focused startups have raised the capital they needed, and without a wealth of new competition, there’s less need for the companies to raise more. Maybe.

Closing with something light, ChatGPT has, of course, made an appearance in the realm of CFO software. Want to bet a nickel on whether that idea makes it into production?