Materia, a comprehensive artificial intelligence platform built for public accounting firms, today launched with more than $6.3 million in funding to help companies deal with the current accounting labor crisis.

The round was led by Spark Capital. Other investors also participating in the round included Haystack Ventures, Thomson Reuters Ventures, Exponential Founders Capital and the AI2 Incubator.

“Accounting firms across the U.S. are struggling with teams wasting valuable hours on low-value, tedious tasks that can be shifted to AI-powered workflows, freeing up accounting and auditing teams to focus on the highest-risk elements of an audit,” said co-founder and Chief Executive Kevin Merlini. “We founded Materia to address this critical need, saving time and helping pick up the heavy lifting and tedious tasks in day-to-day workflows while keeping security and accuracy central to our product design.”

Merlini met the company’s Chief Technology Officer Lucas Adams while working at Facebook, under parent company Meta Platforms Inc., where they worked together building AI systems to parse and understand journalism content. During his work, Kevin reflected on his earlier work with the Big Four accounting firm KPMG LLP and how much of it could have been lightened by the use of AI. This led to the pair incubating the concept at AI2 Incubator in 2022, a few months before the debut of OpenAI’s popular chatbot ChatGPT.

Materia’s AI platform begins by allowing firms to store all their knowledge in a secure space the company calls the Knowledge Hub, which creates an enterprise search layer across different data silos. It can be used by the company’s flagship service Materia AI Assistant and Document Analysis Workspace, which combine a company’s internal knowledge with authoritative external sources to provide comprehensive and accurate answers.

The platform is SOC2 compliant and does not use any client data for training the multiple AI models under the hood. The accuracy of answers produced by the AI models is put through rigorous testing by a panel of certified public accountants and subject matter experts who audit AI performance regularly, the company said.

The Materia AI assistant and document analysis can both provide quite question-answering capabilities using natural language that can help uncover relevant information from a customer’s knowledge base. The assistant also integrates with Microsoft 365 products so that it’s accessible within common applications.

Users can also use the AI platform to standardize their workflows by having the AI design templates for common analysis, contracts and other tasks. With this tool a user needs only specify the type of template that they want to create including a description and the tool will build out a template that can be edited to a customer’s need, making it quick and easy to get one created from scratch.

A shortage of accountants in the U.S. is affecting companies large and small, as well as accounting firms. Part of this is being driven by the expectation that 75% of certified public accounts will retire within the next 15 years and the number of new members joining the workforce is down 33%, according to a report from The CPA Journal. Historically, accounting is not a practice seen as glamorous or desirable, leading to a low number of new entrants.

Materia believes that a solution that helps provide a better day-to-day experience for accountants, along with secure, accurate answers will provide relief for this looming issue.

The AI-assisted accountant industry already becoming somewhat crowded, the Big Four accounting firms have been investing heavily in the use of AI for lawyers and accountants, including PricewaterhouseCoopers LLP and KPMG. Dublin-based cloud accounting platform AccountsIQ also recently announced the expansion of AI-powered tools for accountants alongside a $65 million funding round.

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