In today's economic landscape, where there is often much talk of doom and gloom, an interesting trend is emerging - entrepreneurship is on the rise in the United States. In 2024, an average of 430,000 new business applications were submitted each month, representing a significant 50% increase from 2019. This surge in business startups is a testament to the entrepreneurial spirit that still thrives in the country.
However, a Contrasting Trend in the Accounting Field
While entrepreneurship shows remarkable growth, the number of accountants needed by these new businesses is actually on the decline. Nearly 75% of Certified Public Accountants (CPAs) are expected to retire within a decade, and fewer graduates are choosing accounting as a career due to the relatively lower pay compared to fields like technology and finance.Serial Entrepreneur David Phillips and His Venture Fondo
Serial entrepreneur David Phillips has recognized this growing gap and has launched his latest venture, Fondo. This innovative platform uses software, artificial intelligence (AI), and accounting experts to provide a comprehensive bookkeeping service specifically designed for startups and small- and medium-sized businesses.Phillips founded Fondo in 2020 after successfully selling his coding school startup, Hackbright, to Capella University in 2016. His experience and expertise as an angel investor, having invested in over 85 startups including Rippling, Flexport, and Liquid Death, have equipped him well to build a successful accounting service.The 4-year-old startup operates on a subscription-based model and has already achieved remarkable success. It has secured approximately 1,200 customers, reached an annual recurring revenue of $6 million, and is profitable. Some of its notable customers include ElevenLabs, Karat, PostHog, Campus, and Limitless AI."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," Phillips proudly stated.Securing Funding and Doubling Down on Traction
To further strengthen its position and build on its existing success, Fondo recently raised an oversubscribed $7 million seed round. The round was led by Money Forward, a Tokyo-based fintech company, with participation from renowned investors such as Y Combinator, Motley Fool Ventures, Next Coast Ventures, a16z Scout Fund, Index Ventures Scout Fund, and Twenty Two Ventures. This valuation of the company at $66 million reflects the market's confidence in Fondo's potential.What Sets Fondo Apart
Fondo is not alone in recognizing the opportunity in the accounting space for small- and medium-sized businesses. However, Phillips believes that Fondo differentiates itself by offering an "all-in-one solution" tailored specifically for high-growth startups."Traditionally, founders have relied on separate services for each financial function, which leads to inefficiencies and a higher risk of errors. Fondo combines all these services into one platform, simplifying financial and tax operations for startups," he explained.Using Proceeds for Growth
The company will utilize the funds from the recent seed round to invest in product development and automation. It is also building an AI agent that will serve both its internal team and customers. This AI agent will enable users to extract valuable insights and analysis from their financial statements, accounts, cash flow, and other important financial data.Currently, Fondo has about 70 employees and is actively recruiting in various roles such as product, engineering, accounting, and more."We are dedicated to building a robust product that evolves with the changing needs of startups. This includes expanding our analytics and reporting capabilities, integrating with other tools that founders commonly use, and enhancing our tax-saving options. Additionally, we are exploring ways to support startups as they expand internationally and navigate the complexities of global compliance," Phillips emphasized.
