Nominal tackles legacy ERP systems with Generative AI

Nominal is targeting the SMB and midmarket with an ERP replacement system that is launching today, and will eventually rely strongly on channel partners.

Today, startup Nominal is coming out of stealth, utilizing generative AI to bridge the gap between older and expensive ERP systems and the financial management needs of modern mid-market, multi-entity businesses. Nominal announced its launch with $9.2 million in seed funding from Bling Capital and Hyperwise Ventures, with participation from Vela Partners, Incubate Fund and executives from, Salesforce, Justworks, ServiceNow and Intel. Nominal plans to use the funds to accelerate its product offering, expand its market reach, and increase sales and support resources in the U.S.

Nominal is not really an enterprise player, but they sell to most of the rest of the market.

“Sage sells to the midmarket and SMB and we are in their marketplace, said Guy Leibovitz, Nominal’s CEO and Co-founder. “We also have mutual customers with Sage. We target the midmarket as well, although there is a difference between us and SAP Joule and Sage Copilot. In addition, Sage and Oracle and SAP all continue to use the General Ledger.

In contrast, Nominal simplifies things with a shadow ledger that seamlessly extends existing ERPs and general ledgers, requiring no migration and carrying no risk to current operations. Nominal’s key innovation is its generative subledgers that transform free text, documents and spreadsheets into automated workflows. The generative subledgers include an intercompany ledger for streamlined multi-entity consolidation and efficient management of cross-company transactions, a lease subledger to simplify ASC 842/IFRS 16 compliance, as well as accruals and revenue recognition subledgers.

“The shadow ledger is one key innovation, that rebuilds the books based on our two way system,” Leibovitz said. “The second innovation is RAG – [Retrieval Augmented Generation], which is a new buzz word in GenAI. It refers to an AI framework for retrieving facts from an external knowledge base to provide more information to the LLM. The third innovation is fine tuning the model by showing it to an LLM of specific accounting objects.”

The platform also offers custom workflows, to let businesses to tailor their financial operations to their specific needs. The generative workflows can operate in auto-pilot mode or under human supervision to ensure financial accuracy.

Leibowitz said that Nominal has two true competitors – Excel and manual work.

“We can save the customer 20 hours a month by switching from Excel to Nominal,” he stated.

While Nominal is still in the proof of concept stage of selling, that is not the long term plan

“Verticals, VARs and distribution partners will be key to our success,” Leibowitz said. “We will have a focus on holding companies. Even those who have a significant amount of entities tend to  have small accounting teams. There are a  lot of Excel files that we can replace in multi-entity customers such as holding companies, real estate, energy and multinational technology companies our initial go-to-market plans.”

The long-term plan – in due course – is to use resellers and distribution as their primary Go-to-Market. They are working on expanding their distribution channels and exploring different options to reach more customers.

“We are looking to expand our channel with existing Sage and Netsuite partners, including working with one in Europe,” Leibowitz said. “We will expand in North America as soon as possible.”

“We will be working with the leading distributors of European accounting systems,” he added. “We are not working with anyone in Canada at the moment, although there are some prospects, especially in the renewable energy space.”