Enterprise resource planning (ERP) systems are the heartbeat of many companies that centralize the core business processes across an organization, handling various functions like finance HR, supply chain, inventory, service, procurement, etc. However, the legacy ERPs, which were mostly designed in the early 2000s, are beginning to show signs of age and are unable to keep up with the complex demands of today’s businesses. Nominal seeks to modernize the ERP system with its platform that uses generative AI to transform business logic into accounting workflows. The platform creates a shadow ledger that can be implemented quickly without disrupting existing systems or migrations that can then be used to handle the financial management needs of multi-entity businesses to simplify tasks like the development of consolidated statements, reporting, revenue recognition, or even customized items. While integrating with a company’s entire financial stack, Nominal serves as a unified workplace that also syncs and updates in real time. At launch, the company is focused on targeting mid-market, multi-entity companies across real estate, energy, and technology as well as holding companies.
AlleyWatch caught up with Nominal Cofounder and CEO Guy Leibovitz to learn more about the business, the company’s strategic plans, recent round of funding, and much, much more…
Who were your investors and how much did you raise?
We’re excited to announce that we’ve raised $9.2M in seed funding led by Bling Capital and Hyperwise Ventures, with participation from Vela Partners, Incubate Fund, and executives from notable companies such as Bill.com, Salesforce, Justworks and ServiceNow. This funding will allow us to accelerate our product offering, expand our market reach, and increase our sales and support resources.
Tell us about the product or service that Nominal offers.
Nominal is harnessing generative AI to bridge the gap between outdated, costly ERP systems and the financial management needs of modern mid-market, multi-entity businesses.
The $44B ERP market (Gartner 2023), originally revolutionized by the cloud, now grapples with outdated systems requiring costly engineering to meet modern companies’ needs. Nominal believes that generative AI is a pivotal technology, especially in light of the decline in CPA candidates and the surge of financial and accounting point solutions. Compared to existing retrieval-based assistants such as SAP Joule and Sage Copilot, Nominal takes a proactive approach, transforming business logic into automated accounting workflows.
The company plans to use the funds to accelerate its product offering, expand its market reach, and increase sales and support resources in the U.S. The company primarily focuses on mid-market, multi-entity companies such as holding companies, real estate, energy, and multinational technology companies in its initial go-to-market plans.
What inspired the start of Nominal?
Golan Kopinchinsky (cofounder) and I met while he was the VP of R&D at Cognigo, a company that I founded and exited to NetApp in 2019. We had a miserable experience with ER, both at a startup and at a Fortune 500 company post-acquisition. We decided that a better ERP is inevitable -and more so in the GenAI era.
How is Nominal different?
Nominal’s AI-powered platform is different in several key ways. First, our shadow ledger extends existing ERPs and general ledgers without requiring migration, minimizing risk and disruption to current operations. Second, our generative subledgers transform various data inputs and business logic into automated workflows, streamlining processes such as multi-entity consolidation and management, lease accounting, and revenue recognition. Third, our platform offers custom workflows, allowing businesses to tailor their financial operations to their specific needs. Lastly, our period-end collaboration tool and advanced reporting capabilities enable finance teams to focus on strategic growth rather than manual tasks.
What market does Nominal target and how big is it?
The current ERP market is worth $44B.
What’s your business model?
We are a pure software-as-service company, and since the AI does the customizations, there’s no service competent.
How are you preparing for a potential economic slowdown?
We believe that an economic slowdown could actually be advantageous for Nominal. During challenging economic times, companies are more reluctant to invest in expensive, lengthy ERP implementation projects. Interestingly, the previous wave of ERP adoption took place in the early 2000s during a recession. Our AI-powered solution offers a more cost-effective and efficient alternative, allowing businesses to modernize their financial management processes without the need for extensive capital investments or disruptions to their existing systems.
What was the funding process like?
We were fortunate in our funding process because we had already established relationships with Kyle Lui from Bling Capital and Nathan Shuchami from Hyperwise Ventures. We had known them for a while and were eager to partner with them due to their expertise and shared vision for Nominal’s potential.
What are the biggest challenges that you faced while raising capital?
One of the main challenges we encountered while raising capital was that many VCs recognized the pain points, the market opportunity, and the big TAM of the ERP space. However, some investors initially thought that building our solution would be too difficult and too capital-intensive. Despite these concerns, our early market traction has provided strong indications that our approach is not only feasible but also provides significant value to our target customers.
What factors about your business led your investors to write the check?
I believe several factors contributed to our investors’ decision to invest in Nominal. Many VCs are well aware of the complexities and challenges associated with implementing traditional ERP systems. They recognize the significant market opportunity and the need for a more modern, AI-driven solution. Additionally, the fact that our founding team has successfully navigated this space before, with the acquisition of our previous company Cognigo by NetApp, likely instilled confidence in our ability to execute on our vision and deliver value to our customers
What are the milestones you plan to achieve in the next six months?
In the next six months, we plan to achieve several significant milestones. We will focus on expanding our platform’s capabilities by introducing new AI-powered workflows Additionally, we aim to accelerate our market expansion efforts within the mid-market segment, targeting diverse industries where our solution can deliver substantial value. We will also prioritize customer success initiatives to gather feedback, measure impact, and ensure our clients achieve their desired outcomes. Lastly, we plan to establish strategic partnerships with complementary technology providers and system integrators to expand our ecosystem and provide customers with a more comprehensive and integrated solution.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
My advice would be to focus on maintaining a low burn rate and prioritizing initiatives that have the greatest potential to generate revenue and drive growth. One effective approach is to pursue multi-year deals with built-in expansion opportunities, as this can provide a more stable and predictable revenue stream.
Where do you see the company going now over the near term?
In the near term, we see Nominal expanding its offering to adjacent markets, building upon our success in the mid-market segment. By leveraging our AI-powered platform and the insights gained from our current customers, we will identify new opportunities to address the financial management needs of businesses in related sectors. This expansion will allow us to tap into additional revenue streams, diversify our customer base, and further establish Nominal as a leading provider of accounting automation solutions.
What’s your favorite restaurant in the city?
I have to give a shout-out to Paros in Tribeca. Not only do they serve incredible Greek cuisine, but their Lychee Green-Tini cocktail is an absolute must-try.
