There is a potential upstart of a startup in the Financial Consolidation vendor market. Fluence Technologies has just emerged from a stealthy launch last year. After a successful first year, it is looking to grow quickly in 2021. This is a startup with a difference. It is led by a team of experienced executives, Enterprise Times had the opportunity to talk to two of the cofounders late last year to find out more. Don Mal, formerly the founder and CEO of Vena Solutions and John Power led Longview as CEO for a decade. Mal is the Executive Chairman and Power the CEO of Fluence Technologies. Enterprise Times previously spoke to Mal several times while at Vena.
Who are Fluence Technologies?
Mal answered saying: “Fluence technologies is a software company that provides solutions for the mid-market to solve for finance processes, primarily Financial Consolidation. Secondarily, the close process and then also for planning and reporting. A true corporate performance management software vendor that focuses primarily on financial consolidations.”
Power added: “If I was to put a slightly different spin on it. I like to say, we sell confidence and time. Confidence that your numbers are right. That we’ve got your back, and we’ll get to your weekends back.”
The elephant in the room
With the founders previously working in competitors, how did this come about?
Power replied: “I’ve known Don for quite a few years. We used to meet quarterly or every six months for breakfast, just to compare notes.
“We had this idea that there was an opportunity in the mid-market for a new and innovative approach to Financial Consolidation. As we were bouncing that idea around something came along, where are we said, ‘Oh, my God, here’s a Financial Consolidation engine that we had realised would have taken us a long time to build from scratch’. We bundled that with Vena initially and now our offering. We’ve been in the market for about a year now and doing exceptionally well.”
The consolidation engine was built by Hervé Capo, now VP Product and the third co-founder, who has more than 30 years experience in the sector. You have both had successful careers already, why did you choose to come back to high-stress jobs again?
Mal answered: “It’s the opportunity and also the people. The chance to work with, John and many folks who have been in this space a long time, bringing different perspectives. The opportunity is really special, an underserved market. We’ve been doing this a long time, with Longview, Clarity and Vena. It’s special to fill that void with solutions that are going to really impact companies and people, make their lives a lot better and make companies perform better. That’s the inspiration behind it.”
Power, who had left Longview and was old enough to think about retiring, decided he felt he was too young to do so. He added: “As much as it’s stressful because you’re launching a startup and you’re delivering a new product into the market, it’s fun. You’re creating something with a group of people that mean something to you. It has an added bonus beyond just creating something in an underserved market and so forth, which is very relevant. I’m getting to do it with a bunch of friends, and that’s pretty cool. That opportunity doesn’t come along very often.”
You mentioned a partnership with Vena, is that still in place?
Mal answered: “We partner with Vena for clients that are either existing Vena clients or are looking at planning as a first project they need to solve for. Vena is a very, very good planning solution. At the same time, there’s a big enough market for us to just go at the market for financial consolidations, in which case, we position our solution, first and foremost. That’s our go-to-market.”
Who are your key technology partners?
Power replied: “Microsoft would be the significant technology partner on our side. We see a big opportunity to leverage the tools. The obvious thing is Excel on the front end where you give the end user something that they’re familiar with. But, you address all of the shortcomings of Excel in terms of being a true performance management platform by connecting it to a database with security and workflow, and all of those things. Azure and taking advantage of Azure data factory for integration (including ERP). Power BI for reporting is embedded with connectors, the ability to create dashboards and do more sophisticated things around analytics.”
“Slack is the other tool from a collaboration point of view. We’ve got really tight integration with Slack so that you can communicate broadly across your organisation with some context about what you’re up to and what’s going on.”
Customers include Recochem and Karora Resources. Fluence focuses on the mid-market. It is looking for partners to help with localisation in countries outside the US where it sells direct. In 2021, it is looking to expand, especially in the UK where it has a nascent organisation. Is Fluence targeting specific industries?
Mal answered: “We’re really agnostic to industries. There is a handful that come to mind. Mining, private equity, manufacturing, and pharmaceutical are more active from an M&A perspective. So they acquire companies on different ERPs. But there are dozens of verticals.”
How is Fluence different from its competition?
Mal continued: “The vendors in the space have primarily targeted the enterprise companies. The mid-market has somewhat been left behind although some solutions are just modules by other CPM (Corporate Performance Management) vendors. It’s as an afterthought. It’s not a primary solution area for even the CPM vendors. Whereas for us, Financial Consolidations is first and foremost the solution that we think about and that we’ve built our product around. So the mid-market is very much underserved, and we see that.”
Power added: “You need to be a programmer to make a lot of the tools in this space work. They’re very powerful and flexible, but you need a PhD in the platform to actually maintain it and make it work. A lot of those solutions are sold in the mid-market, but they tend to be overkill.”
While it aims for between two and four major updates a year Fluence also rolls out updates regularly as most cloud vendors do. Power explained why saying:
“Monthly, you’ll see us drip enhancements and small changes that clients can get excited about. In my experience in delivering these types of solutions, there’s a lot of value to giving small improvements to clients that are easy to absorb and digest. Someone comes in on a Monday morning and goes oh my god, that little thing that I was asking about they went and did, and it’s there. We’ll send them a notice and point them to it. But part of the objective is to be a little more frequent and make the stuff a little more digestible, and value add, on a more immediate timescale.”
What is on the roadmap for next year in terms of product?
Power replied: “You’ll see us enhance the consolidation offerings and some of the integration on Microsoft. You’ll see improvements and releases around Account Reconciliation. You’re going to see some really cool features and capabilities around cash flow reporting and management that’s much more of a direct cash flow model than the typical indirect cash flow model that CPM solutions tend to focus on.”
On the future growth
What are your objectives for 2021?
Mal said: “We started the business just a little over a year ago. To be at 100 customers by the end of 21 would put us at the fastest trajectory of any CPM company to get that many customers within that short time.”
What’s the ultimate goal?
Mal said: “Build a great company. We proved that with Vena today, 10 years later, there’s 500 employees with 1000 customers. We want to do something very special and similar we’re very excited about that, John?.”
Power continued: “I couldn’t put it better. We see an opportunity here to grow this. There’s a huge untapped market in the mid-market where 70% of the organisations out there, in this space are still using Excel. A measure of success will be if we can dent that significantly, and offer them something that’s better.”
You mainly bootstrapped with a seed funding round led by MarsIAF. Are you looking for additional fundraising to grow faster?
Mal replied: “We’re going to continue to fund the business for growth. We see opportunities to do so. We will continue to fund purely to grow the business as we see opportunities.”
Any plans for acquisitions?
Mal noted: “We’ll look at everything to grow in the business. We’ve been talking about potential technology. We might look at acquiring capabilities in other geographies, to give us accelerated reach into those markets.”
Power added: “It’s pretty obvious when you look at what’s been going on in the CPM space. There’s a lot of investor activity and a lot of interest. We have been approached by investors who are interested in participating with us either in the next round or in a roll-up strategy. Right now we’ve got our roadmap for being successful and we’ll look at investment and those types of opportunities when that makes sense for us.”
The recent acquisition of Prophix by Hg Capital validates this viewpoint.
What are your challenges?
Mal commented: “We are a newer solution in the market. That’s a challenge. The way that we’ve been able to meet it, and it’s resonating really well in the market, is that the team is not in by any stretch new. There are centuries of experience on the team. People see that we are firm that they can trust with the people behind it to deliver and stand behind the product.”
Power added: “Focus, as an organisation is a big part of that and it’s one of the pitfalls of any startup is being focused on what your strategic vision is. The fact that we do have a team of pretty experienced ex CEOs and managers and people from the space is allowing us to maintain that focus and not chase after something that might be the latest shiny object but maybe a little outside the sweet spot of where we think we can be successful. We’re proving to be pretty good at that right now. But that’s something you got to be diligent about.”
What colour is the ocean that Fluence is swimming in?
The opportunity that Mal and Power see is not a blue ocean with no competitors. The analogy is a body of water with a lot of sharks in it. That water is freshwater though, and Fluence is a freshwater creature, more suited to it than the sharks currently swim there. Mal and Power believe that they can make a difference and grow significantly. 2021 should be a pivotal year.
The book question
Final question, what’s the latest business book you’ve both read?
Power replied: “I picked up and I haven’t finished it yet, This Book Will Make You Kinder (US/UK) by Henry James Garrett. My daughter – a neuroscientist – recommended it to me as the “handbook” on empathy. It’s all about empathy and a different spin on management and in business.”
Mal said: “The challenger customer (US/UK), is a book that I’ve been most recently reading. There are different sales methodologies out there. The trusted advisor, the challenger sale, there’s the new one called the challenger customer. It’s a very interesting book around how buying groups and companies make decisions and how to align with them effectively. It’s a very interesting read.”