In a time when entrepreneurship is booming in the U.S., the accounting profession faces a significant challenge. With nearly 75% of certified public accountants (CPAs) expected to retire in the next decade and fewer graduates entering the field, startups and small businesses are turning to innovative solutions like AI-driven bookkeeping services to fill the gap.
Key Takeaways
- Entrepreneurship Growth: An average of 430,000 new business applications were submitted monthly in 2024, a 50% increase from 2019.
- Accountant Shortage: The impending retirement of CPAs and declining interest in accounting careers pose challenges for new businesses.
- Fondo’s Solution: Founded by David Phillips, Fondo offers an AI-powered bookkeeping platform tailored for startups and small to medium-sized businesses.
- Financial Impact: Fondo has saved clients over $75 million in taxes and helped them secure $16 million in tax credits.
- Recent Funding: The company raised $7 million in a seed round, valuing it at $66 million.
The rise in entrepreneurship is evident, with a staggering 430,000 new business applications filed each month in 2024. This surge represents a 50% increase compared to 2019, indicating a vibrant landscape for startups. However, as new businesses emerge, they face a critical shortage of accountants to manage their financial needs.
The accounting profession is at a crossroads, with projections indicating that nearly 75% of CPAs will retire within the next decade. This looming retirement crisis, coupled with a decline in accounting graduates—who often opt for more lucrative fields like technology and finance—creates a pressing need for innovative solutions.
Fondo: A New Player in Bookkeeping
David Phillips, a serial entrepreneur, recognized this gap and founded Fondo in 2020. The company leverages AI and accounting expertise to provide a comprehensive bookkeeping platform designed specifically for startups and small to medium-sized businesses.
Fondo operates on a subscription-based model and has quickly gained traction, boasting approximately 1,200 customers and achieving an annual recurring revenue of $6 million. Notable clients include Eleven Labs, Karat, PostHog, Campus, and Limitless AI.
Phillips highlights the financial benefits of using Fondo, stating, "To date, we have saved our customers over $75 million in Delaware Franchise Tax and helped them receive over $16 million back from the IRS in tax credits."
Recent Developments and Future Plans
To further its mission, Fondo recently secured $7 million in an oversubscribed seed funding round led by Money Forward, a Tokyo-based fintech company. This funding round, which also saw participation from prominent investors like Y Combinator and a16z Scout Fund, values the company at $66 million.
Fondo differentiates itself from competitors by offering an all-in-one solution that streamlines financial and tax operations for high-growth startups. Phillips explains, "Traditionally, founders use separate services for each function, resulting in inefficiencies and a higher risk of errors. Fondo combines these in one platform to simplify financial and tax operations for startups."
The company plans to utilize the new funding to enhance its product offerings and automation capabilities. This includes developing an AI agent that will assist both internal teams and customers in extracting insights from their financial data.
Looking Ahead
With a current workforce of about 70 employees, Fondo is actively hiring across various roles, including product, engineering, and accounting. Phillips emphasizes the company’s commitment to evolving its product to meet the needs of startups, including expanding analytics, reporting capabilities, and international compliance support.
As the demand for accounting services continues to grow alongside the rise of new businesses, innovative solutions like Fondo’s AI-driven bookkeeping platform are poised to play a crucial role in addressing the accountant shortage and supporting the next generation of entrepreneurs.
