Collective raises $50M funding to launch AI-powered finance platform for freelancers

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Collective, an online back-office platform for solopreneurs, announced today that it raised $50 million in funding from a syndicate of investors, including Google’s AI fund, Gradient Ventures, Innovius Capital, The General Partnership, General Catalyst, QED, Expa, and Better Tomorrow Ventures. The funding will support the launch of Collective’s new AI-driven financial management offering.

By deploying AI technology across its operations, Collective aims to expedite its growth and onboard the nearly 100,000 businesses on its waitlist.

Collective offers services tailored to “businesses-of-one,” services including business formation, S-election, payroll, tax and bookkeeping solutions. 

The company claims its services have experienced significant growth in tandem with the booming freelance industry. Collective said that 39% of the U.S. workforce currently engages in freelance work, a number projected to surpass 50% by 2027.


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To meet the increasing demand, Collective used large language models (LLMs) to develop AI copilots. These copilots collaborate with a company’s tax experts, accountants, bookkeepers and relationship managers, significantly reducing the time required for essential processes like bank reconciliation and expense categorization.

“AI is profoundly impacting our platform across all of our workflows,” Hooman Radfar, Collective’s CEO, told VentureBeat. “Nearly 60-70% of manual bookkeeping is spent on bank reconciliation and expense categorization. Our copilot is designed to assist our team with bank reconciliation and categorization — transforming their role from authors to editors. Millions of hand-categorized bookkeeping entries are used in conjunction with the GPT-4 API to power our internal-facing application, which can reduce the time for expense categorization by 90% and bank reconciliation by 70%.”

With the additional funding, Collective plans to expand its range of AI tools and scale its operation to achieve double its original growth projection.

“The funding will be utilized to deepen our investment in our core platform, deliver new internal AI copilots and update our member-facing applications. Moreover, we will continue to scale our operations to better serve our rapidly growing and evolving membership base,” Radfar told VentureBeat. 

Easing freelancers’ finance management through AI 

Collective’s platform offers company formation, full bookkeeping, payroll and tax filing services. The company emphasizes its ability to tailor this stack specifically to the needs of solo business owners, providing end-to-end support — from formation to tax services.

“On the formation side, we S-elect our members’ entities (example: LLCs), enabling them to save an average of $10,000 annually by optimizing the methods they pay themselves,” said Radfar. “Our payroll engine is custom-built using Gusto’s API for this particular use case, and, in conjunction with our platform, we can help power recommendations to our members to optimize their tax savings.” 

According to Radfar, the team is dedicated and well-trained in understanding the nuances of this business category. Their expertise enables them to optimize expense categorization, minimizing quarterly and annual tax liabilities.

Radfar further noted that many successful solopreneurs are currently in a “zone of no service.” Despite having sufficient income to invest in a solution, their businesses are designed to remain small-scale, making them ineligible for the services of existing SMB software providers who cater to larger enterprises.

Collective bridges this gap by using AI to deliver an enterprise-like solution at an affordable cost.

“We fill a gap in the market for businesses which are usually too small to be served by existing SMB accounting and payroll solutions (even the DIY tools for formation, bookkeeping, tax and payroll require more domain expertise than most freelancers possess), and don’t have the time or budget to piece together a network of local accounting, payroll, tax and legal advisors,” Radfar told VentureBeat. 

Radfar asserts that using AI gives the company significant advantages over traditional accounting firms, making it a strong competitor.

“Using AI dramatically impacts our unit economics. As our unit economics improve, we can increase our GTM efforts — spending in ways other firms cannot. With a larger ‘collective’ of members, our dataset grows and further fuels our AI efficacy,” added Radfar. “This flywheel is incredibly powerful as it delivers compounding advantages over time to our platform.”

He said that Collective has ambitious plans for growth. With the infusion of new funding, the company aims to enhance its AI capabilities and introduce a new web-based, digital experience for its members.

“We plan to make this experience available to freelancers wherever they work by launching mobile-first apps. We also plan to expand the core apps available to our members in areas like banking, credit, retirement and more,” said Radfar.

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