In late 2022, Noah Pepper, formerly a key player at Stripe for the Asia Pacific region, launched a new venture named Multiplier. Initially aimed at tax accountants, Multiplier envisioned providing them with software solutions. However, the release of ChatGPT sparked a change in Pepper's approach: What if AI could revolutionize the way professional service firms used technology?

In an interview with TechCrunch, Pepper expressed, “I realized that rather than building a SaaS business, my mission should be to make these people more effective.” As part of this new area of focus, Multiplier acquired Citrine International Tax, a specialized provider for international tax accounting services. Subsequently, Pepper directed Multiplier to maximize the potential of Citrine by equipping it with AI capabilities.

The experiment paid off. With the elimination of routine tasks, Multiplier's AI tools led to a significant increase in Citrine's profit margins, over doubling them. Buoyed by this success, Pepper shifted Multiplier's business model. Instead of developing software for accounting firms, Multiplier's new game plan involved acquiring existing professional service businesses and bolstering their efficiency with its AI solutions.

Today, the firm, now redubbed Multiplier Holdings, is thrilled to announce that it has successfully raised a total of $27.5 million in seed and Series A financing rounds. Lightspeed Venture Partners took the lead in the Series A round, following Ribbit Capital and SV Angel's active participation in the seed round.

Multiplier is part of an emerging trend where startups revamp traditional service businesses by integrating AI tools for scalability and efficiency. This tactic of acquiring businesses and enhancing them with AI, akin to a PE-style roll-up, attracts VCs, including General Catalyst, Elad Gil, Thrive, and Khosla Ventures.

Lightspeed partner Justin Overdorff shared his opinion, declaring, “Until AI existed, none of this was possible.” Lightspeed has already invested in three other, yet undisclosed, businesses bolstering growth with AI.

Overdorff is of the opinion that startups tend to be more successful when they acquire smaller companies, as such firms are usually more open to changing existing processes.

Before Multiplier, Citrine was a tight-knit group of 12 tax accountants. With Multiplier, Citrine not only amplified its profit margins but also experienced significant growth, Overdorff explained.

By extending the envelope and aiming for lofty targets, Multiplier hopes to go above personal tax compliance and develop an AI-powered rival to the Big Four accounting firms.

Pepper shared that Multiplier is actively scouting for high-revenue-generating service companies led by enthusiastic individuals who are eager to blend AI into their business model, helping them reach new levels of success.

Pepper observed, “It’s somewhat akin to a venture-style business, where the objective is to place your bet on a proficient leader who you believe can be extraordinary in their respective category.”