Finout is J-Ventures latest investment. We joined Team-8 and Pitango (which opened an allocation for J-Ventures after the round was officially closed) to join in. Please see more about the round: https://techcrunch.com/2022/06/16/cloud-cost-management-platform-finout-raises-18-5m/
What they do?
Finout is the first self-service cloud cost observability platform that combines business metrics with AWS/Kubernetes cost management, slicing it up to customers, features, and unit metrics for healthier business decision-making.
Finout is on a mission to build the ultimate modern-day ERP system. We understand that the usage-based pricing surge in the world and the cloud providers' increasing complexity demands a solution that helps companies understand how much everything will cost and why. Finout’s platform is currently used by dozens of companies such as WalkMe, Riskified, Hunters, Logz.io, Pixellot, Singular, and Bigabid, among others. The company employs 22 people in its offices in Tel Aviv.
Our Due Diligence Team:
J-Ventures Domain Experts and Industry Professionals:
● Ilan Frank - VP, Product Platform at Airtable. Prior VP of Product at Slack - https://www.linkedin.com/in/ilanfrank/
● Ram Ofir - Investor and Advisor at Gig Capital, prior President & CEO Amimon (sold to Vltec Group) - https://www.linkedin.com/in/ramofir/
● Gal Horvitz - Investor and operator, prior founder & CEO PNMsoft (acquired by Genpact) and SVP Digital Strategy at GENPACT -
● Julian Levy - Operating Partner at Redline Capital, investor in several companies such as BigID, Anima App, Harbr, Secure Code Warrior and others - https://www.linkedin.com/in/julianlevy/
● Simon Roy - CEO, Jemstep (acquired by Invesco), Investor & Entrepreneur at Matthis Advisors - https://www.linkedin.com/in/simonroy/
What we liked about the company :
1. Product Need - As companies increasingly migrate their workloads to the cloud, it’s becoming clear that cloud spend can be difficult to forecast and manage. According to a 2022 Flexera report, companies waste an estimated 32% of their cloud budget owing to underestimates of usage. According to an a16z report, software companies invest roughly 50% of CoR in Cloud infrastructure. With those estimations in mind, the 50 leading software companies can save around $100b in cloud costs, annually. There are Finout attempts to estimate the cost of cloud providers, data warehouses and content delivery networks together, combining them into one large bill. Integrating with AWS products, Kubernetes clusters, Snowflake storage, Stripe, Twilio and more, the platform correlates and analyzes cost into business KPIs while providing recommendations and alerts. Beyond a consolidated bill, Finout can break out the costs of services and products by different, arbitrary segments. For example, Ravhon said, it can expose the cost of individual Kubernetes pods running in a cloud instance, or the amount it’s costing to run apps to service a specific customer.
2. Right Market Timing - As the industry migrates to usage based pricing & billing, with companies looking for and asking cloud & SaaS vendors on how their product and services usage stack up in costs, how to attribute these costs internally in operational budgets and making these teams financially responsible.
With Finout, the leadership and financial teams can understand the profitability of any customer, feature, business unit, and service they sell, while without Finout, it is impossible to attribute the cloud cost component to any specific customer, as it is all bundled up in one bill. Just knowing that [a company] spends a million dollars a month for cloud services is great, but it’s also meaningless. Is it a lot? Is it good? Did it grow correlative to the customer base? What is the price of a specific customer out of that bill? These are the questions leadership seeks to answer, as cost management becomes a board-level priority.
Both the pandemic and the tech slowdown are an opportunity for Finout. The pandemic pushed cloud adoption forward in many sectors, and the tech
slowdown is making many companies focus more on controlling their cloud spending. With companies across the spectrum now seeking granular-level data points to inform key decision making, Finout will be in a prime position to attract new customers and their business spend.
The correction in the tech market has shifted focus from top-line growth to profitability, gross margins, unit economics, and healthy business metrics for sustainable, long-term success. We’ve witnessed dozens of companies struggling to develop a solution to deal with the surge in usage-based cloud pricing, but nothing has been available
3. Playing in an Evolving New Category, “FinOps” - Cloud spend can drive more revenue, signal customer base growth, enable more product and feature release velocity, or even help shut down a data center. FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions. At its core, FinOps is a cultural practice. It’s the way for teams to manage their cloud costs, where everyone takes ownership of their cloud usage supported by a central best-practices group. FinOps is the way for Cross-functional teams in Engineering, Finance, Product, etc work together to enable faster product
delivery, while at the same time gaining more financial control and predictability. Finout is closing the distance between the different players, making sure everyone has the same information in their own language, in order to make company-wide decisions. It enables the conversation and makes the prioritization process easier, as data is clearer and incentives are aligned.
Other names for the practice include “Cloud Financial Management”, “Cloud Financial Engineering” “Cloud Cost Management”, “Cloud Optimization”, or “Cloud Financial Optimization”. FinOps is becoming an increasingly important and integral part of the companies’ FP&A function providing the benefits of planning and governance. without a strong FinOps operation, your company may be paying for things it doesn’t need, tools no one is using, licenses that have been abandoned. With the initial inherent savings of the cloud, your spending can balloon over time if you aren’t paying attention, making it more profitable to go back to an on-perm architecture at times. As this option seems very unlikely in the ever growing cloud adoption, a different method to save on the cost should be adopted.
4. Backed By Strong Investor Syndicate - FinOut recently raised a $18M series-A round led by Team8, with participation from seed funding partners R Squared Ventures, Jibe Ventures and Seed Investor Ariel Maislos. Leading angel investors and toDay Ventures also participated in the seed round. The funding comes as Finout’s proprietary solution is in high demand, with an increasing
number of cloud-enabled companies adopting its platform, such as WalkMe, Riskified, Hunters, Logz.io, Pixellot, Singular and Bigabid, among others.
Finout’s ability to translate technology to business attribution, getting them all the way to cost per customer positions them to be a solution needed by companies who are looking to go deeper in understanding the financial burden of their cloud infrastructure, services and what it takes to serve their customers. The FinOut product to actually optimize costs and achieve better margins, businesses need to measure the cloud cost increase in relation to the business so they can make informed decisions and ensure that engineers take action.”
How we can help? Intros to potential customers. CFO's and COOs.