In late 2022, Noah Pepper, a former Asia-Pacific striped business lead, founded Multiplier, a startup aimed at selling software to tax it. However, it happened to him that shortly after ChatGpt was released, AI could change the way professional service companies use technology.
“I realized I was barking the wrong tree by trying to build a SaaS business. Instead, I need to understand how to make these people more effective,” he told TechCrunch.
The startup has acquired Citrine International Tax, a boutique provider of cross-border tax accounting services, and has bolstered the company with AI capabilities built by Multiplier.
It quickly became clear that the strategy was working. By eliminating manual work, Multiplier’s AI tools helped Citrine get more than twice the profit margin. So instead of building software for accounting companies, Pepper decided to acquire the existing professional services business and equip it with AI solutions.
Today, the multiplier, now known as multiplier holdings, announces it has raised a total of $27.5 million in seed and Series A funding. Lightspeed Venture Partners led the Series A funding round for the startup, following Multiplier’s Seed Round, led by Ribbit Capital, along with participation from SV Angel.
Multipliers are part of the growth trend. It’s a startup that acquires existing services businesses and scales them with AI. PE-style rollup strategies have recently gained popularity among VCS, helping startups develop AI solutions and integrate them into companies focused on existing people.
“None of this was possible until AI existed,” said Justin Overdorff, partner at LightSpeed. In addition to the multiplier, LightSpeed is investing in three other rollup companies with AI that have not yet been announced.
Overdorff believes this strategy is most effective when startups buy small businesses, as they are open to modify existing processes. “When I went to an accounting firm with 200 accountants, [high] rate. “
Before it was purchased by Multiplier, Citrine was a 12-person tax accounting organization. The multiplier not only helped increase margins, but also helped citrine grow, Oberdorf said.
Multiplier’s goal is to expand beyond providing personal tax compliance and creating AI-powered competitors in Big Four accounting firms.
Pepper said Multiplier is looking to buy a highly re-registered service company led by people who are excited to integrate and customize AI to take their business to the next level.
“It’s like a venture-style business where you want to bet on this leader you think is amazing in their category,” Pepper said.
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