In a move that defies conventional venture capital wisdom, Khosla Ventures has led a $10 million seed round for Synthetic, a new AI bookkeeping startup founded by Ian Crosby — the same entrepreneur whose previous company, Bench Accounting, collapsed in 2024 before being acquired at a fraction of its former valuation.
A Controversial Bet on a Founder’s Second Act
Most investors would steer clear of a founder whose last startup imploded and whose new vision may not yet be technically feasible. But Khosla partner Jon Chu told TechCrunch he sees opportunity where others see risk. “I tend to run towards controversy a little bit,” Chu said. He draws a parallel to Parker Conrad, who was ousted from Zenefits in 2016 only to later found Rippling, now valued at nearly $17 billion. “In controversy, groupthink often shapes the narrative rather than the truth of the story itself,” Chu added.
Also read: Cerebras raises $5.5B in blockbuster IPO, pricing at $185 as AI chip demand surges
Chu’s conviction is that people can learn from failure. He spoke with several executives who worked with Crosby after his departure from Bench, and they all “had fantastic things to say about Ian,” Chu said. The three roles Crosby held after leaving Bench — including a stint at Shopify and founding Teal, which was acquired by Mercury — provided what Chu believes was ample opportunity for growth.
What Went Wrong at Bench
Crosby maintains he wasn’t directly responsible for Bench’s insolvency. He was fired by the board in 2021, three months after turning down a $250 million acquisition offer from Brex. The board disagreed with his strategic direction, especially as the business was burning cash, and his executive team was reportedly frustrated with his direct leadership style. Bench ultimately collapsed when new management couldn’t restore the company to health on its own. “He took a big swing, made a few mistakes. That didn’t go well,” Chu acknowledged.
Also read: Final Call: Startup Battlefield 200 Applications Close May 27
Synthetic’s All-or-Nothing Vision
Synthetic aims to build a fully autonomous AI bookkeeper that generates accrual-based financials without any human involvement. Crosby is unequivocal about the approach: “We’re not going to release anything that’s not fully autonomous. It’s that or bust.” The startup plans to serve only AI and other software startups initially.
But Crosby acknowledges the technology isn’t ready yet. AI models still make significant bookkeeping mistakes. While Synthetic’s prototype works for a narrow group of users, he remains uncertain how it will scale. He offered an analogy: “It’s like a self-driving car that can drive down one street versus the self-driving car that can drive down any street. We haven’t driven down enough streets to know if it’s going to crash.”
Why This Matters for Fintech and AI
The bet on Synthetic reflects a broader trend in venture capital: investors are increasingly willing to fund moonshot AI applications in legacy industries, even when the founder carries baggage. Bookkeeping, a $100 billion global market dominated by human-dependent platforms like Xero and QuickBooks, is ripe for disruption. But fully autonomous AI bookkeeping has remained elusive due to the complexity and variability of financial transactions.
Crosby says he can afford to be patient. “I’ve raised years of cash, so we can just wait it out,” he said, indicating the startup is prepared to wait for foundational models to become more reliable. This long runway is a luxury most early-stage startups don’t have, and it underscores the depth of Khosla’s conviction.
Conclusion
Khosla Ventures’ $10 million bet on Synthetic is a high-risk, high-reward wager on a founder’s redemption arc and a technology that may not yet exist. It challenges the prevailing narrative that failed founders are damaged goods, and it tests whether AI can finally deliver on the promise of fully autonomous accounting. For investors, founders, and fintech watchers, Synthetic represents a case study in how venture capital weighs past failure against future potential.
FAQs
Q1: What is Synthetic, and how is it different from existing bookkeeping software?
Synthetic aims to build a fully autonomous AI bookkeeper that generates accrual-based financials without human accountants. Unlike platforms like Xero or QuickBooks that rely on human input, Synthetic’s goal is complete automation.
Q2: Why did Bench Accounting fail?
Bench collapsed in 2024 after its new management couldn’t turn the company around. Founder Ian Crosby was fired in 2021 after the board rejected his strategic direction and he turned down a $250 million acquisition offer from Brex.
Q3: Is the technology for Synthetic’s vision currently possible?
Not fully. Crosby admits AI models still make significant bookkeeping mistakes, and the prototype only works for a narrow set of users. The startup is betting that foundational models will improve over time.
Be the first to comment