Collective, which is an AI-first provider of financial infrastructure for building agency-specific financial operating systems designed for one-person companies, has raised a total of $100 million in capital to speed up the development of such a system that is meant to serve one-person businesses exclusively.
This capital structure includes a $40 million Series B led by General Catalyst, QED Investors, and Gradient Ventures, joined by Intuit Ventures, FT Partners, and SemperVirens. The equity raise is complemented by a $60 million growth debt from General Catalyst’s Customer Value Fund (CVF).
Solving the Problem of Administrative Drag Restraining High-Earning Solo Practitioners
The emergence of AI has allowed individual practitioners to generate outputs which used to be possible only by teams of a corporation. The number of solo businesses in America exceeds 30 million with the individual operators making seven- and eight-figure revenues growing at record paces.
But scaling a one-person company poses serious operational challenges. Self-employed people typically use separate pieces of software for business accounting, payroll handling and tax filing, paying huge fees to traditional accounting firms. These routine tasks consume time and do not allow concentrating on the development of a business, resulting in missing out on tax deductions.
Collective solves these problems by providing a single financial platform instead of using several pieces of software. Instead of managing several software pieces personally, Collective runs autonomously in the background performing workflows and optimizing finances.
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The following operational capabilities have been built into the platform:
LLC Incorporation and S-Corp Election: Provides the ability to incorporate an LLC and elect for S-Corporation status to create tax-efficient operations.
Real-Time Ledger Accounting: Utilizes automated algorithms that categorize banking transactions to keep up-to-date with ledgers without needing manual entries.
Payroll & Owner Distributions: Facilitates automatic salary distributions and compliance with reasonable compensation regulations to help owners reduce payroll taxes.
Year-Round Tax Planning & Compliance Services: Offers year-round tax planning, automated filing, and regular compliance checks to optimize statutory deductions.
Insurance Coverage: Directly connects sole entrepreneurs to the appropriate commercial liability and health insurance coverage.
AI and Expert Support: Makes use of machine learning to automatically address half of all support queries and is supplemented with expert tax advisors.
“Collective has been an absolute godsend,” said Eddy Adams, a Graphic Designer who uses Collective. “Working as a self-employed designer, I can offload most of my tax responsibilities and focus on my daily workload. Through the s-corp setup, I also save tens of thousands of dollars in taxes every year. Their service pays for itself!”
“AI is leveling the playing field, making it possible for a single individual to build a powerful, highly profitable enterprise,” said Hooman Radfar, co-founder and CEO of Collective. “Traditional accounting firms scale by adding people. Collective scales with intelligence. Every workflow we automate and every part of the financial stack we bring onto the platform increases what Collective can do for our members. We’re building toward a world where a Business-of-One can access the financial capabilities of a much larger company without having to build the team behind it.”
“With CVF, we look for companies with high-quality unit economics and a large market opportunity,” said Pranav Singhvi, Partner and co-head of CVF, General Catalyst. “We see solo businesses as one of the most dynamic segments of the economy, and we expect that trend to accelerate as AI advances. Collective has built a one-stop shop for their financial needs. Their vision and track record make Collective exactly the kind of company CVF was designed for.”
Demonstrated Commercial Growth and Quantifiable Client Savings
The capital expansion follows a year of rapid commercial adoption for Collective, with annualized recurring revenue (ARR) expanding 120% year-over-year. To date, the platform has generated an estimated $350 million in aggregate tax savings for self-employed professionals, with high-earning members securing annual tax reductions of up to $40,000.
By eliminating administrative overhead, Collective equips independent operators with the back-office efficiency and financial capabilities of an enterprise finance department.