Collective, an online back-office platform for solopreneurs, has recently secured $50 million in funding from various investors, including Google’s AI fund, Gradient Ventures. The funding will be used to support Collective’s new AI-driven financial management offering and accelerate its growth. With the help of AI technology, Collective aims to streamline its operations and efficiently onboard the extensive waitlist of nearly 100,000 businesses.
As a platform tailored for businesses-of-one, Collective offers a range of services such as business formation, S-election, payroll, tax, and bookkeeping solutions. The company has observed significant growth alongside the flourishing freelance industry, with 39% of the U.S. workforce currently engaged in freelance work. This number is projected to exceed 50% by 2027.
To meet the growing demand, Collective has leveraged large language models (LLMs) to develop AI copilots that collaborate with tax experts, accountants, bookkeepers, and relationship managers. These copilots play a crucial role in cutting down the time required for key processes such as bank reconciliation and expense categorization. By utilizing AI, Collective aims to transform the roles of its team members from authors to editors, significantly increasing their efficiency.
With the additional funding, Collective intends to expand its array of AI tools and scale its operations beyond the initial growth projection. The company’s CEO, Hooman Radfar, shared that the funding will be utilized to strengthen the platform’s core infrastructure, develop new internal AI copilots, and enhance the member-facing applications. Radfar also emphasized the importance of providing optimal services to Collective’s growing membership base.
Collective’s platform offers comprehensive services including company formation, full bookkeeping, payroll, and tax filing. The platform’s key focus lies in catering to the specific needs of solo business owners, offering complete support from formation to tax services. By leveraging AI, Collective provides an enterprise-like solution that is cost-effective for small-scale businesses, bridging the gap between existing SMB software providers that typically serve larger enterprises and freelancers who require a tailored solution.
Radfar highlighted the advantages of using AI, stating that it greatly impacts the company’s unit economics. By continually improving unit economics, Collective can invest in marketing initiatives that other firms cannot. Additionally, as the number of Collective members increases, the platform’s dataset grows, further enhancing the effectiveness of AI.
Looking towards the future, Collective has ambitious plans for growth. With the recent funding injection, the company aims to enhance its AI capabilities and introduce a new web-based, digital experience for its members. The company plans to launch mobile-first applications, making their services accessible to freelancers regardless of their location. Furthermore, Collective intends to expand its core applications to include banking, credit, retirement, and other areas in order to provide a comprehensive set of services to its members.
Collective’s success lies in its ability to utilize AI to optimize its operations, outperforming traditional accounting firms and offering a compelling solution to businesses. The company’s commitment to innovation and growth positions it as a strong competitor in the industry. By utilizing AI technology and focusing on the evolving needs of solopreneurs, Collective is set to bring significant advancements to the online back-office platform space.
