Materia Simplify Accounting Tasks by Utilizing AI

The United States is currently experiencing a shortage of accountants. According to the American Institute of Certified Public Accountants, fewer new candidates took the CPA exam in 2022 compared to 2006. One contributing factor to declining interest in the field may be the significant amount of tedious work involved. Accountants often spend considerable time sifting through large volumes of unstructured data for audits or to find specific information.

Kevin Merlini, co-founder and CEO of Materia, left the accounting profession for this very reason and now focuses on reducing these challenges for other accountants. Materia seamlessly integrates with existing workflow software and popular applications such as Microsoft Excel and Teams, aiming to break down data silos within accounting firms. This integration allows Materia to automate and streamline mundane tasks during audits, enabling accountants to concentrate on high-risk areas that require specialized attention. Additionally, Materia provides robust search capabilities across a firm’s data and documents, facilitating quick access to information.

Materia leverages advanced generative AI platforms like OpenAI to analyze and process information extracted from a firm’s documents, enhancing efficiency and accuracy in accounting processes. But Materia will face a lot of competition from already based innovative conversational AI tools in the market, like WorkBot, which offers powerful data management and automation features. It integrates with major productivity software to streamline operations and share real-time knowledge. This AI assistant can help accountants by simplifying the search for internal data with the help of its knowledge base and automating routine tasks, further alleviating the workload that contributes to the industry’s high attrition rates. 

Merlini said, “Accounting professional services has been interesting because it is almost underlooked, and has been underserved, so there is a pretty compelling story to tell there,” He continued, “There is also a lot of pressure on firms to improve efficiency. There are a lot of PE acquisitions. There are a lot of forces that are incentivizing firms to invest in their efficiency and quality.”

The company has emerged from stealth mode with $6.3 million in funding. Spark Capital led the round, joined by Haystack Ventures, Thomson Reuters Ventures, Exponent Capital, and the Allen Institute for AI, among others. According to Merlini, Materia already serves five customers, including the top 100 accounting firms in the U.S. and the top 15 firms, with some deploying Materia across their entire auditing teams.

Merlini’s path to launching Materia was anything but direct. Despite majoring in accounting and earning a master’s degree in the field, his tenure as an auditor at KPMG lasted only about four months.

“If you study accounting, it is actually pretty interesting,” Merlini said. “You are figuring out a way to bring all this complex stuff that happens in a year and boil it down to numbers that could be compared across companies. But when it came to being an auditor, and doing the work at a big four {accounting firm}, there is a lot more drudgery.”

Despite recognizing the industry’s issues early on, Merlini spent eight years in the tech sector before founding Materia. He was a product manager at Amazon for over six years and later worked at Meta, focusing on large language models and their application in journalism classification.

Driven by his desire to become a founder and resolve the pain points from his brief accounting career, Merlini left Meta in 2022 to determine his next steps. Observing the significant advancements in AI, he realized he could address the longstanding problems in accounting, leading him to establish Materia.

“It was clear to me that large language models were a huge paradigm shift in what was possible. I had a decent amount of friends from college that work in accounting services and had a preexisting network there and started to do discovery. What are these big pain points, and where are the current solutions falling short?” said Merlini.

Merlini and co-founder Lucas Adams incubated Materia at the Allen Institute for AI during the summer of 2022. With the rollout of ChatGPT later that year, they capitalized on the momentum of the AI boom.

According to Merlini, security and accuracy are paramount for Materia. Their agreements with OpenAI and other AI companies ensure that the language models do not learn from Materia’s customer queries. Additionally, Materia provides citations for all information sources, allowing for verification of data used in audits or provided as answers to accountants’ questions.

While in stealth mode, Materia has offered a white-glove service to a select group of firms. Now emerging from stealth, the company aims to target the top 200 accounting firms in the U.S., with plans to expand further downstream in the future.

“How exciting the opportunity is, not for us as a company but for the professionals. One of the reasons that there is a shortage of folks [in accounting] is there is a lot of attrition. Until recently, this automation wasn’t practical or possible. We are just excited to get started.” said Merlini.

Materia and WorkBot are leveraging AI to transform how accounting firms and organizations work. While Materia is focused on automating audit tasks, WorkBot is designed to streamline HR and organizational workflows. Despite their different focuses, both tools share similarities in their ability to upload files, extract insights, and provide search capabilities. As the accounting and HR industries continue to evolve, tools like Materia and WorkBot are poised to play a significant role in shaping the future of work.

Get a free demo to learn more about WorkBot and how it can help your organization streamline workloads and get ahead of the competition.