Collective, a platform and advisory team that provides bookkeeping, payroll, and tax advice to freelancers, has announced a significant funding round of $50 million. This investment brings Collective’s total raised to $82 million, further solidifying its position in the market.
Funding Round Led by Gradient Ventures and Other Notable Investors
The funding round was led by Gradient Ventures, Innovius Capital, The General Partnership, General Catalyst, QED, Expa, and Better Tomorrow Ventures. This impressive lineup of investors underscores Collective’s strong growth trajectory and its potential for future success.
Growing the Company’s Operations and Headcount
According to Hooman Radfar, co-founder and CEO of Collective, the funding will be used to invest in product development and scale the company’s operations. The goal is to increase the company’s headcount by approximately 30% by next June, reaching a total of around 250 employees.
The Growing Market for Freelancer Financial Services
Radfar notes that during economic downturns, such as the 2008 recession, the COVID-19 pandemic, and the current tech sector challenges, the self-employed market has experienced significant growth. This trend is expected to continue, with 39% of the U.S. workforce now participating in freelance work, projected to increase to over 50% by 2027.
The Challenges Faced by Freelancers
Managing finances, including invoicing, tracking expenses, and paying taxes, remains one of the most significant challenges for freelancers. According to a poll, managing finances is a significant challenge for 18% of freelancers. Collective aims to alleviate these issues by providing an all-in-one platform that offers bookkeeping, payroll, and tax advice.
The Inspiration Behind Collective
Radfar was inspired to found Collective based on his personal experiences growing up as the child of immigrants. His parents navigated complex financial systems, often relying on accountants and lawyers to manage their finances. Radfar realized that there must be a better way for freelancers to manage their finances, leading him to create Collective.
The Role of AI in Disrupting the Tax and Accounting Market
Gradient Ventures’ Shirazi notes that language models will enable operationally-intensive processes to scale more quickly and with lower cost. Collective is harnessing this capability by applying AI to bookkeeping, accounting, and reconciliation. The company’s complex workflows and proprietary data uniquely position them to leverage AI to disrupt the tax and accounting market.
Conclusion
Collective’s latest funding round underscores its commitment to innovation and growth in the freelancer financial services market. With a strong team, impressive investor lineup, and a clear vision for the future, Collective is poised to make a significant impact on the industry.