- US faces an accountant shortage; fewer new CPA candidates since 2006.
- Materia integrates AI into accounting workflows, targeting drudge work reduction.
- Founded by Kevin Merlini, former auditor turned tech innovator.
- Secured $6.3M funding from Spark Capital and others, targeting top US firms.
- Focus on AI-driven efficiency, data integrity, and sector-wide impact.
Main AI News:
The US faces an accountant shortage. In 2022, fewer first-time CPA exam takers were noted than in 2006, says the American Institute of Certified Public Accountants. One possible reason for this lack of interest is the extensive drudge work involved: Accountants must sift through vast amounts of unstructured data for audits or to find answers.
Kevin Merlini, Materia’s co-founder and CEO, left accounting for this very reason and now works to alleviate this burden for others.
Materia integrates with firms’ existing workflow software, like Microsoft Excel and Teams, breaking down silos in accounting firms’ unstructured data troves. This allows it to automate mundane audit tasks, enabling accountants to focus on high-risk areas. It also simplifies data and document searches across firms. The company employs generative AI platforms such as OpenAI to process firm documents.
“Accounting professional services are intriguing because they’ve been overlooked and underserved, making for a compelling story,” Merlini told TechCrunch. “Firms are under pressure to enhance efficiency due to PE acquisitions and other factors.”
Emerging from stealth with $6.3 million in funding, led by Spark Capital with participation from Haystack Ventures, Thomson Reuters Ventures, Exponent Capital, and the Allen Institute for AI, among others, Materia already serves five customers. Merlini noted they include top US accounting firms, with some rolling out Materia across their entire audit groups.
Merlini’s path to launching Materia wasn’t straightforward. While he studied and earned a master’s in accounting, he lasted only four months as an auditor at KPMG.
“Studying accounting is fascinating as it simplifies complex year-long activities into comparable numbers across companies,” Merlini said. “But auditing at a Big Four firm involved too much drudgery.”
Despite this realization, he spent eight years in tech before founding Materia. At Amazon for over six years and recently at Meta focusing on large language models and journalism classification, Merlini always aimed to be a founder. He left Meta in 2022, drawn to solving accounting challenges with AI advancements.
“The potential of large language models was evident,” Merlini said. “I had friends in accounting services and began exploring pain points and existing shortcomings.”
Incubating at the Allen Institute for AI in summer 2022, alongside ChatGPT’s rollout, Materia benefited from AI’s momentum. Security and accuracy are top priorities, with Materia’s agreements limiting LLMs from learning from customer questions. Sources for all information used in audits or answers are cited, ensuring accuracy.
Operating discreetly, Materia provided a high-touch service to select firms. Now, targeting the top 200 US accounting firms post-stealth, Merlini is enthusiastic about the opportunities AI presents.
“It’s exciting for professionals,” Merlini said. “Automation wasn’t feasible until recently, contributing to the shortage in accounting. We’re eager to get started.”
Conclusion:
Transforming accounting practices through AI, as exemplified by Materia, addresses critical industry challenges such as workforce shortages and the inefficiencies of manual data handling. The substantial investment and strategic targeting of top accounting firms underscore a growing recognition of AI’s potential to revolutionize traditional sectors. This shift not only enhances operational efficiency but also positions Materia at the forefront of innovation in professional services, setting a precedent for broader adoption across the market.
