Multiplier Secures $27.5M to Drive AI-Powered Accounting Roll-Ups

Multiplier, a startup founded by ex-Stripe executive Noah Pepper in late 2022, has raised $27.5 million in seed and Series A funding to fuel its AI-powered accounting roll-up strategy. Initially conceived as a SaaS provider for tax accountants, Multiplier pivoted after recognizing the transformative potential of AI, particularly following the release of ChatGPT.

“I realized I was barking up the wrong tree by trying to build a SaaS business, and instead I should figure out how to make these people more effective,” Pepper told TechCrunch.

The company’s strategy involves acquiring existing professional service businesses and equipping them with its proprietary AI solutions. A key example is the acquisition of Citrine International Tax, a cross-border tax accounting firm, which saw its profit margins more than double thanks to Multiplier’s AI tools streamlining operations and eliminating manual tasks.

Lightspeed Venture Partners led the Series A funding round, with Ribbit Capital and SV Angel participating in the seed round. The company is now known as Multiplier Holdings.

Multiplier is at the forefront of a growing trend where startups acquire service businesses and scale them with AI. This roll-up strategy, reminiscent of private equity, has attracted attention from investors like General Catalyst, Elad Gil, Thrive, and Khosla Ventures.

Justin Overdorff, a partner at Lightspeed, emphasized the importance of AI in this new wave of acquisitions: “Until AI existed, none of this was possible.” Lightspeed has invested in multiple AI-powered roll-up companies, including Multiplier.

Overdorff believes that acquiring smaller companies is crucial for successful AI integration, as they are typically more receptive to adopting new processes. He noted that Citrine, a 12-person firm before the acquisition, experienced significant growth and margin improvements under Multiplier’s ownership.

Multiplier’s ambition extends beyond personal tax compliance; the company aims to become an AI-driven competitor to the Big Four accounting firms. Pepper is actively seeking to acquire high-recurring-revenue service firms led by individuals eager to integrate and customize AI to enhance their businesses. He likened the process to venture investing, emphasizing the importance of backing exceptional leaders.

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