Despite the gloomy talk about the economy, entrepreneurship is actually on the rise in the United States. An average of 430,000 new business applications will be submitted each month in 2024, an increase of 50% from 2019.
However, the number of accountants needed by these new businesses to maintain their books, file taxes, and perform related accounting tasks is decreasing. Nearly 75% of CPAs are expected to retire within 10 years, and fewer graduates are choosing accounting simply because it pays less than fields like technology or finance.
Serial entrepreneur David Phillips sees an opportunity to fill this growing gap with his latest venture, Fondo, which leverages software, AI, and accounting expertise to provide a bookkeeping platform for startups and small businesses. I think there is.
Phillips founded Fondo in 2020 after selling his coding school startup Hackbright to Capella University in 2016. He is also an angel investor and has invested in over 85 startups including Rippling, Flexport, and Liquid Death.
The four-year-old startup operates on a subscription-based model and is already profitable, with about 1,200 customers and $6 million in annual recurring revenue, Phillips said. . The company's customers include Eleven Labs, Carat, Posthog, Campus, and Limitless AI.
“To date, we have saved our customers more than $75 million in Delaware franchise taxes and helped them recover more than $16 million in tax credits from the IRS,” said Phillips.
To double its traction, the company recently gained participation from Y Combinator, Motley Fool Ventures, Next Coast Ventures, a16z Scout Fund, and Index Ventures Scout, led by Tokyo-based fintech firm Money Forward. , raised an oversubscribed seed round of $7 million. Fund, Twenty Two Ventures. This round values the company at $66 million.
(From LR): Diane McCormack (COO), David Phillips (Founder and CEO), Brian Simmons (CPO). Image credit: Fondo
Fondo isn't the only one who sees an opportunity here. Many companies offer accounting services to small businesses, including Pilot, Digits, Final, and Bench.
But Phillips feels Fondo differentiates itself by offering an “all-in-one solution” for high-growth startups. “Traditionally, founders have used separate services for different functions, resulting in inefficiency and a high risk of error,” he said. “Fondo combines these into one platform to simplify financial and tax operations for startups.”
The company will use the proceeds to invest in products and automation. The company is also building an AI agent for internal teams and customers that Phillips said can be used to extract insights and analysis about financial statements, accounts, cash flow, and more.
Fondo currently has approximately 70 employees and is hiring across product, engineering, accounting and other roles.
“We are focused on building a robust product that evolves with the needs of startups, including expanding analytics and reporting capabilities and adding integration with other tools used by founders. , including enhanced tax-saving options. We're also looking at ways to help startups scale globally and navigate the complexities of global compliance,” Phillips said.