Jul 18, 2022

Arc Analytics - Financial Insights For Improved Business Fundamentals

Don Muir portrait
Don MuirCo-Founder & CEO

The role of a startup Founder CEO involves wearing every hat imaginable. Some days are spent in the trenches closing a new customer with an AE or wireframing a new feature with the product team. Other days are spent thinking through financial planning, marketing and PR, and recruiting.

No two days are quite the same. And that’s why I love this role so much.

Amidst the regular context switching, it can be difficult to allocate enough time and attention across the many different parts of the business. There will undoubtedly be times when you wear one “hat” longer than another. Whether because of a CEO’s own bias in favor of certain parts of the business, or important gaps that need to be filled. Bottom line: not every part of the business gets a founder’s full attention all the time.

Founders’ focus an incredible amount of time and effort understanding their finances in the run up to fundraising. This makes perfect sense given the weight investors place on unit economics and strong business fundamentals. That’s never been more true than in a choppy market like this one, where investors' scrutiny has increased substantially.

That’s a lot of hours toiling over go-to-market planning, adjusting budgets, and optimizing unit economics. We index heavily on runway and cash burn while we simultaneously chase down terms sheets and spin up airtight data rooms.

But fully understanding your finances shouldn’t just be a fundraising exercise. It should be evergreen. The best startup operators actively keep company financials top of mind, and always look for ways to drive them in the right direction.

In this macro-environment, having an incomplete understanding of your startup’s finances is like backpacking in Yosemite without a map, a GPS or a compass. You might have a general idea of where you’re heading, but one slight miscalculation could set you miles off course. A short trail can turn into a cross country trek with time spent and energy wasted getting back on track.

Given how high the stakes are, why wouldn’t you focus on making sure you're setting out on the right path from the beginning and arm yourself with the right tools from the get-go? 

Some founders solved this problem by bringing on a finance lead or chief financial officer to regularly pull, process, and garner insights from their financial data. Others outsourced the entire finance function to an outside firm. Regardless of the scenario, the process involved manually pulling financial data, transforming it and then leveraging offline tools to make sense of it all. The entire process is time-consuming and expensive.

In recent years, solutions have cropped up, enabling founders to streamline how they access, process and make sense of financial data. However if the data is siloed, you’re really not gleaning actionable insights. Is $5M ARR growing at 6% MoM with 75% gross margins sufficient traction to raise my Series B? What is the mean Sales & Marketing expense for a $20M ARR Series B SaaSCo? Am I Default Alive? While the siloed financial data is helpful, making decisions requires drilling down into the details.

As a founder I’ve witnessed this limitation firsthand, which is why I’m incredibly excited to announce a new way to analyze and benchmark financial performance—Arc Analytics.

Arc Analytics is an analytics tool to help founders understand their financial performance and improve their business fundamentals in real-time. This product-extension of Arc Runway leverages API-driven solutions combined with machine learning and other data enrichment layers to deliver actionable financial insights by benchmarking across an exponentially growing pool of premium software startups in the Arc Network.

With Arc Analytics, founders can benchmark their top expense categories against their peers to identify and reduce overspend, and test capital deployment strategies in real-time. We’ve combined all of the capabilities of traditional financial reporting tools—forecasting, financial analytics and financial modeling, with a best-in-class user experience. 

Launching Analytics underscores our bigger view on traditional financing as a whole – it’s slow, taxing, and very opaque. Funding decisions are one element of the process that historically has been a blackbox when it doesn't need to be. 

We’re proud to be part of the change working to reverse this norm. 

In addition to performance data, we’re telling companies firsthand what they need to do differently to qualify for better terms because we believe transparency is key. Our hope is that by shining a light on key opportunities of improvement (influenced in part by our own funding criteria and underwriting model) founders are empowered to get to default investable—and ultimately, default alive.

As the macro environment continues to evolve, having access to robust reporting and real-time analytics will be crucial. Financial performance (not TAM or vision) is the cornerstone of venture investors these days, so having access to the right information at the right time can mean the difference between a successful raise and running out of cash. 

If you’re looking for tools to help you do just that, non-dilutive financing to fuel your growth, or a deposit account that's better than your business bank, reach out—we’re here to help.