Multiplier Raises $27.5M to Revolutionize AI-Powered Accounting

Multiplier Holdings: A New Approach to Scaling Professional Services with AI

Noah Pepper, previously a business lead for Stripe in the Asia Pacific region, launched Multiplier in late 2022. Initially, the company focused on developing software for tax accountants.

However, the release of ChatGPT prompted a shift in perspective. Pepper recognized the potential for artificial intelligence to fundamentally alter technology utilization within professional service firms.

Acquisition and AI Integration

“I came to understand that pursuing a traditional SaaS model was misguided,” Pepper explained to TechCrunch. “My focus should instead be on enhancing the effectiveness of these professionals.”

To this end, the startup acquired Citrine International Tax, a specialized provider of cross-border tax accounting services. Multiplier then augmented Citrine’s capabilities with AI tools developed in-house.

The results were quickly demonstrable. By automating previously manual tasks, Multiplier’s AI solutions enabled Citrine to more than double its profit margins.

From Software to Acquisition Strategy

This success led Pepper to a pivotal decision: rather than building software *for* accounting firms, Multiplier would acquire existing professional service businesses and equip them with its AI technology.

Today, now operating as Multiplier Holdings, the company has announced the completion of $27.5 million in seed and Series A funding.

Funding and Investor Confidence

Lightspeed Venture Partners spearheaded the Series A funding round. This followed a seed round led by Ribbit Capital, with additional investment from SV Angel.

Multiplier is at the forefront of a growing trend: startups acquiring established service businesses and leveraging AI to drive scalability.

The Rise of AI-Powered Roll-Ups

This PE-style roll-up strategy has recently garnered significant attention from venture capitalists. Investors including General Catalyst, Elad Gil, Thrive, and Khosla Ventures are actively supporting startups that create AI solutions and integrate them into companies centered around human expertise.

“The emergence of AI has made this entire approach viable,” stated Justin Overdorff, a partner at Lightspeed.

Lightspeed has invested in four companies employing this AI-powered roll-up strategy, including Multiplier, with three additional investments yet to be publicly disclosed.

Focus on Smaller Acquisitions

Overdorff believes that acquiring smaller companies is the most effective path for implementation. These businesses are generally more receptive to adopting changes to their established workflows.

“Convincing a large accounting firm with 200 accountants to embrace new processes at a significant rate is a considerable challenge,” he noted.

Citrine’s Transformation

Prior to its acquisition by Multiplier, Citrine operated as a 12-person tax accounting firm. Multiplier not only improved its profitability but also facilitated its expansion, according to Overdorff.

Future Expansion and Goals

Multiplier’s ambition extends beyond personal tax compliance; the company aims to become a formidable, AI-driven competitor to the Big Four accounting firms.

Pepper indicated that Multiplier is actively seeking to acquire service firms with strong recurring revenue streams. These firms should be led by individuals enthusiastic about integrating and customizing AI to elevate their businesses.

“This approach resembles a venture investment, where you identify and back exceptional leaders within their respective fields,” Pepper concluded.